Zimbabwe Fiscal Restraint Ushers in Durable Stability 

Sunday Mail  

August 3, 2025

Tapiwanashe Mangwiro

THE Government has sent a clear signal of its resolve to maintain a tight fiscal stance, even as it accelerates infrastructure investments, underscoring its commitment to bolstering long-term growth without jeopardising the gains registered over the past 15 months.

In his Mid-Term Budget Review delivered to Parliament on Thursday, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube reported that infrastructure spending reached ZiG15,7 billion in the first half of 2025, financed from existing resources, and vowed that the fiscus would not be stretched beyond its means.

“Infrastructure is our springboard for inclusive growth, but it cannot come at the expense of monetary discipline,” Minister Ncube told legislators.

“We will not tap into funds we do not have, because to do so would undo the progress we have fought hard to achieve in stabilising the ZiG (Zimbabwe Gold).”

The message leaves little doubt about the Government’s fiscal playbook for the remainder of 2025, which seeks to prioritise staying within budget parameters, even as new roads, dams and health care facilities are modernised and refurbished.

Cumulative infrastructure outlays from January through June stood at ZiG15,7 billion, nearly a quarter of the ZiG59,4 billion earmarked for the full year.

Of that half-year total, ZiG15 billion was drawn from the central Government’s coffers, while statutory funds and development partner grants accounted for ZiG610,9 million and ZiG56,8 million, respectively.

External loans, capped at ZiG1,8 billion for the year, remain untapped so far, reflecting a conscious decision to minimise fresh debt.

“Zimbabwe is proving that you can scale up critical public works without resorting to unbudgeted borrowing or money printing,” said Dr Prosper Chitambara, an economist.

“This approach cements market confidence; it tells both domestic and foreign investors that fiscal prudence and infrastructure expansion are not mutually exclusive.”

The bulk of the expenditure has gone towards rural and provincial road rehabilitation, small-scale dam renovations, expansion of primary healthcare facilities and electrification of strategic growth points.

Behind the scenes, ministries, departments and agencies received ZiG7,1 billion to upgrade vehicles, information and communication technology (ICT) systems and equipment, essential enablers of effective project execution.

Dr Chitambara said the Government’s financing mix, leaning heavily on statutory resources and development grants, further reduces inflation risks.

“The ministry has resisted the temptation to monetise deficits,” he said.

“That restraint is why inflation, while still elevated, has decelerated from triple-digit annual rates to more manageable levels.”

Dr Chitambara noted that the 15-month stretch of tight policy measures has already yielded measurable improvements.

“Foreign-currency liquidity in the interbank market is healthier, parallel-market premiums have narrowed and inflation expectations are better anchored,” he said.

“These gains create a virtuous circle, stable macro conditions attract investment, which powers growth, which in turn strengthens the fiscal position.”

Economist Ms Gladys Shumbambiri-Mutsopotsi, who has long warned against the perils of unchecked spending, applauded the Government’s stance.

“Between 2020 and 2024, overshooting budget targets fuelled inflationary pressures and exchange-rate volatility,” she said.

“Through sticking to fiscal ceilings now, Zimbabwe is rebuilding trust in public finances and safeguarding the value of the currency. That discipline is every bit as important as the roads and power lines we are building.”

Banker Mr Raymond Madziva, of Mvunganyi Capital, noted the improved liquidity conditions in the banking sector.

“Tight fiscal policy complements the central bank’s stringent monetary stance,” he observed.

“It has helped stabilise interest rates and deepen money market activity. Corporate treasurers are saying they now have greater confidence in deploying surplus cash to productive investments, rather than holding it under the mattress.”

Mr Madziva believes the guarded approach could pay dividends beyond interest rate stability.

“Lower sovereign risk ratings and predictable fiscal outcomes can unlock cheaper finance for private infrastructure developers,” he said.

“If Zimbabwe continues on this trajectory, we will see more public-private joint ventures, greater job creation and a faster convergence towards regional peers.”

Zimbabwe’s infrastructure deficit was in the past often financed through ad hoc borrowing or excess money creation, triggering currency depreciation and inflation surges.

The current strategy marks a deliberate departure.

“The lesson of the past is clear: infrastructure without discipline breeds instability,” said Ms Shumbambiri-Mutsopotsi.

“What we are seeing now is a programme anchored in fiscal reality and bolstered by private sector partnerships. That is the only sustainable way forward.”

Indeed, parastatals and development partners have been enlisted to co-finance projects, spread execution risk and bring technical expertise. Projects at 24 rural clinics, for example, are being delivered under a public-private collaboration that leverages grant funding for initial works and then taps local contractors for maintenance. While the half-year numbers are encouraging, ensuring full-year targets will demand continued vigilance.

Allocation for infrastructure for the second half of 2025 totals ZiG43,7 billion, drawing on a diverse funding basket —  ZiG27,8 billion from statutory resources, ZiG1,2 billion in donor support and the remainder from internally generated surpluses.

No new external borrowing has been slated beyond the ZiG1,8 billion already approved.

Minister Ncube stressed that this funding profile is designed to dovetail with macroeconomic goals.

“Every dollar or ZiG we spend is assessed for its impact on our currency reserves, inflation outlook and debt sustainability,” he explained.

“We are building for tomorrow without sacrificing the credibility we have earned.”

As Zimbabwe edges towards its Vision 2030 goal of upper middle-income status, the Government’s insistence on staying within budget, even amid an ambitious infrastructure drive, signals a maturing approach to public finance.

In an environment where funding constraints are real, the choice to live within means may prove more transformative than any single roadway or dam.

“We are not starved for vision; we are constrained by realism,” Minister Ncube quipped at the close of his mid-term budget presentation. Through marrying tight fiscal policy with targeted infrastructure spending, we are laying the foundation for sustained prosperity, brick by prudent brick.”