THE MINISTER OF JUSTICE, LEGAL AND
PARLIAMENTARY AFFAIRS (HON. ZIYAMBI): Thank you Mr.
Speaker Sir. Having consulted the Chief Whips, I seek leave of the House that I present the Second Reading speech of the Consumer Protection Bill because of the urgency that is there –

[HON. MEMBERS:
Inaudible interjections]- I have already concluded with the Chief Whips
– [HON. MEMBERS: Mthuli, Mthuli, Mthuli]-
Thank you Mr. Speaker Sir, I will allow the Minister of Health and
Child Care to give his Ministerial Statement and then we proceed –
[HON. MEMBERS: Mthuli, Mthuli, Mthuli]-
THE TEMPORARY SPEAKER: What is your point of order Hon. Gonese? We want to hear what the Hon. Member is saying.

HON. GONESE: Yes, I have a point of order Mr. Speaker Sir. Today is a Wednesday and on a Wednesday, the Standing Orders are very clear especially relating to Standing Order Number 62, in terms of the Order of Business. However, today during Question Time we were given an assurance by the Minister of Finance that he was going to make a Ministerial Statement. Over and above that, if you read today’s press there is actually on the billboards for newspapers a headline, “State of the Economy” by the Hon. Minister of Finance. So, the nation is actually expecting that.

A Ministerial Statement can interrupt order of business, we accept that. Due to the assurance we were given and even Hon. Members who wanted to pose questions were informed that if they were going to be covered by the Ministerial Statement then that would be deferred. I believe we should not conduct our business in this manner. The Minister of Justice had intended to present the Second Reading of the Consumer Protection Bill – fortunately he has withdrawn that. As Hon. Members, as representatives of the people who were duly elected to represent the interest of the people of Zimbabwe, at this point in time the critical issue is about the state of the economy. People at this point in time are failing to make ends meet.

We have got an issue relating to inflation, people are not able to access their money in the banks, we have what is being talked about as the inter-bank rate but at the present moment if you want to access money you cannot do it, you have to go to the “World Bank” also known as Roadport. We need to have answers to these questions. We are being asked in our constituencies Mr. Speaker and we need to have answers.

We cannot have a Ministerial Statement from the Minister of Health and Child Welfare which was not adverted to. He can come any other day and if he is not available, he can delegate another Minister but for us, the only game in town is the state of the economy. We will not accept his deferment.

The Hon. Minister of Finance and Economic Development is here and I can see that he has his file of papers and we must also be cognisant of the time that if we are going to have a Ministerial Statement by Hon. Minister Moyo and asking questions, we will run out of time because the automatic adjournment of the House is at Five Minutes to Seven o’clock p.m. and the Hon. Minister of Justice, Legal and Parliamentary Affairs as leader of the House has not sought the leave of this House to suspend the Standing Orders. So we will not accept and for those reasons, we insist that we want Hon. M. Ncube to present.

– [HON. MEMBERS:
Inaudible interjections.] –
THE TEMPORARY SPEAKER: Order, order Hon. Members.

The logic behind calling for the Minister of Health and Child Care first is because the Minister of Health and Child Care was supposed to have issued his Ministerial Statement long ago – [HON. MEMBERS:
Inaudible interjections.] –
THE TEMPORARY SPEAKER: I have made a ruling that the Hon. Minister of Health and Child Care will make his Ministerial State –

[HON. MEMBERS: Inaudible interjections.]

THE TEMPORARY SPEAKER (HON. MUTOMBA): Order,
order in the House.
MINISTERIAL STATEMENT
STATE OF THE ECONOMY IN ZIMBABWE
THE MINISTER OF FINANCE AND ECONOMIC
DEVELOPMENT (HON. PROF. M. NCUBE): Thank you Mr. Speaker for the invitation to present the state of the economy. As a preamble, Hon Members would be aware that at the advent of the new dispensation the Government’s approach is to prioritise the economy with focus on implementing deeper reforms that promote stabilisation and economic growth. On this basis, the adoption of the Transitional Stabilisation Programme marked the first major step towards this goal.

Before giving details on economic developments of our country, allow me to contextualise the current environment in the global context. The global economy depicted signs of cooling down during the first quarter of 2019 on account of a confluence of different factors. Trade tensions between the United States and China which were showing signs of thawing are actually flaring up again, posing larger disruptions in the global trade and supply chains. Uncertainty about the United Kingdom’s departure from the European Union termed (Brexit) remain heightened, posing a number of risks to the Euro Zone and the rest of the global economy.

These developments represent a drag on global trade in general and are also reflected in lower commodity prices in general. In addition, tightening of financial conditions in response to the significant financial vulnerabilities associated with large private and public sector debt in a number of developed, emerging and also developing economies restrain global expansion. Global growth is therefore projected at 3.3% for 2019 down from 3.6% in 2018. Similarly, regional growth prospects of SubSarahan Africa remain restricted at levels well below the required 6% to deal with poverty, notwithstanding relative macro-stability in these countries through persistent fiscal consolidation reforms, the debt ratios are worsening, reaching an average of 45% by end of 2017 with more countries recording ratios above 60% of GDP. Moreso, more Sub-
Saharan African countries’ borrowing is increasingly non-concessional; it is commercial against declining exports and hence this poses a debt trap and exchange rate risks.

Sub-Saharan African economies are therefore projected to grow by about 3.5% of GDP in 2019 and I speak to our 2018 and 2019 growth profiles in the tax below.

Let me now turn to the Zimbabwe economy. Beginning 2019, Government in earnest started implementing the TSP from October 2018 to December 2020 through the 2019 National Budget with sharp focus on fiscal, monetary and structural policy reforms for stabilisation and stimulation growth. These initial interventions were therefore confronted by an environment with severe economic shocks which started in the last quarter of 2018.
The situation was further heightened by the drought conditions in terms of the Elnino and impact of Cyclone Idai, which all imposed serious threats to economic growth which was initially projected at 3.1% in 2019. However the deep reforms introduced under the TSP are cushioning the economy from much higher deterioration and in some instances have started yielding dividends. In particular, the styles to tackle head-on the twin deficit challenges has been a reality and we are making progress on that. By twin deficit I mean the budget deficit and the current account deficit both of which have declined substantially in the last few months in the positive direction.

On a positive note, there is marked improved performance on Central Government finances with revenues at RTGs 1.9 billion outperforming the target of RTGs 1.8 billion throughout the first quarter of 2019 to give an overall positive variance of RTGs$ 146 million. On the other hand, expenditures were contained at $1.5 billion against a target of $1.7 billion to give savings of $218.9 million RTGs. This, as a result, gave a budget surplus during this period of $443.1 million RTGs. With regards to prices, fiscal consolidation measures, reinforced with a tight monetary policy together with liberalisation of the exchange rate, are containing inflationary pressures, which although still very high on a year to year basis, are beginning to come under control and dampen on a month and month basis.

Widespread indiscipline in the foreign exchange market is also a major source for parallel exchange market premiums which are feeding into inflation.

Let me now turn to the projection of the gross domestic product. Madam Speaker, Hon. Members will recall that during the presentation of the 2019 National Budget, I emphasised on the necessity of well coordinated Fiscal Monetary Policies which reinforce each other for addressing the current macro-economic vulnerabilities.

Consequently, on the 28th February the Governor of the Reserve Bank of Zimbabwe presented a Monetary Policy Statement aimed at supporting the various macro fiscal and structural austerity measures announced in the 2019 Budget. The Monetary Policy Statement also removed various distortions which prevented efficient functioning of the foreign exchange market, with implications on the rest of the economy. Such distortions also promote the parallel market and fed into multiple pricing of goods and services, and the Monetary Policy Statement is seeking to deal with these distortions.

Specifically, the Monetary Policy Statement introduced a new currency called the RTGs dollar which includes electronic balances in banks and mobile platforms, bond notes and coins. It liberalises the foreign currency market and discarded the fixed exchange rate of 1:1 against US dollar which was at the centre of various foreign exchange price distortions. It will also establish an interbank foreign currency market which comprises banks and bureau de changes that were providing a broad based formal platform for an efficient foreign currency trading within the economy.
Therefore, the RTGs dollar, through the Statutory Instrument 33 in essence became a new reference currency for accounting and transaction purposes domestically. This effectively created an exchange rate between the US dollar and the RTGs dollar being facilitated through the interbank foreign exchange market. The introduction of the RTGs dollar and the subsequent emergence of the exchange rate between the US dollar and the RTGs dollar have necessitated recalibration starting with the base indicator in the form of the nominal gross domestic product (GDP) to reflect the appropriate RTGs dollar value.

Ultimately, the recalibration, of the nominal GDP facilitates adjustment to the 2019 National Budget framework approved by
Parliament on 22 November 2018 and subsequently assented to by
Senate late January 2019 and other macroeconomic and fiscal indicators.
In tandem with this process, ZIMSTAT is also undertaking an appropriate adjustment of nominal GDP in RTGs for historical years between 2009 and 2017. Such historical series of RTGs dollar values are important for consistency, continuity and comparison purposes. Let me now turn to the calibrated 2018-2019 nominal GDP. Hon. Members should know that the recalibration exercise is another step further to refining our GDP while the rebasing of the National Accounts Series exercise was in line with international norms which require replacing the old base year, taking cognisance of changes in the structure of the economy. The current recalibration exercise however, seeks to reflect the appropriate GDP value in the new domestic currency, the RTGs dollar. The change of base and recalibration now are different but complement each other.

The initial steps have involved recalibration of the current estimated 2018 and 2019 nominal GDP projections into RTGs dollar using standard methodologies, which take account of annual average market exchange rates to those subsectors which transactions took place in US dollars, together with appropriate adjustments by the GDP deflator/ inflation developments and updated DGP growth rates. The calibration technical exercise culminated into projected nominal GDP of RTGS$42.8 billion for 2018. Let me pause here and explain in two minutes.
Members will recall when we recalibrated our GDP because of the change in the structure of the economy, our GDP figure came out at about an average of US$25 billion for 2018. Because now we are recalibrating using the domestic currency, we have gone back to adjust that and the adjustment result leaves us with a GDP of $42.8 billion as GDP for 2018 in RTGs dollars. Our projection for GDP in 2019 in RTGs dollars is $70.3 billion RTGs dollars. I have a table here which Members cannot see but I think I have adequately summarised the numbers. There is one number that I wish to share with you which is our real GDP growth for 2018 which we have revised upwards. What happened Madam Speaker is that in the last quarter of 2018, there was a flurry of economic activity. You will recall shelves going empty at some point, but all of that flurry and panic buying activity was creating demand and economic growth. What then happened was, our projected figure which was about 4 percent was outdone by the real performance. The GDP growth has now been revised upwards to 6.2 percent in real terms for the year 2018.
However, in 2019 Madam Speaker, GDP is expected to be way down by the impact of the El-Nino induced drought, the devastating destruction of Cyclone Idai, foreign currency shortages and constrained spending being imposed by fiscal reforms. We have seen that the impact of the drought is already impacting power production and I think we are beginning to see some of the outages being caused by the low water levels on Kariba impacting our hydropower Madam Speaker.

Let me now turn to a very important issue which is the fiscal framework for 2019 in view of the calibration. The recalibrated nominal GDP facilitated the development of updated 2019 fiscal framework with total expenditures of $12.2 billion RTGs dollars against anticipated revenue collections of $9.3 billion RTGs dollars.

Let me further explain Madam Speaker. Members of the House will recall that we had projected revenues of $6.199 billion in the 2019 Budget Statement. This is being revised because of inflation and movement in price naturally, this is being revised to revenue collections of $9.367 billion. I have a table Madam Speaker with all the calculations. You will not see it. I wish I had a screen to have projected it for example, the direct tax revenues we had projected $6.037 billion in the National Budget, it will now be $8.598 billion and income tax for example, was projected to be $971 million and now turn out to be $1.068 billion – [HON. MEMBERS: Inaudible interjections.] –
THE TEMPORARY SPEAKER: Order Hon. Members. For
now, for progress sake, we cannot entertain any point of orders. Let the Minister be heard in silence – [HON. MEMBERS: Inaudible interjections.] –
HON. MADZIMURE: If you can hear me! The purpose of this
Ministerial Statement is for us to understand and the Minister…
THE TEMPORARY SPEAKER: Hon. Madzimure! Order in
the House. Order, we are going to be furnished with copies of the Ministerial Statement.
HON. MADZIMURE: Is it going to be put into our pigeon holes?
THE TEMPORARY SPEAKER (HON. MAVETERA): Yes,
Hon. Clerk, I am sure we are going to finish that. Thank you.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Thank you Madam
Speaker…
Hon. Mutseyami having stood up.
THE TEMPORARY SPEAKER: Order Hon. Minister. Hon.
Mutseyami I think we have been clear about that. For now we need to hear the ministerial statement and then we proceed. Thank you Hon.
Mutseyami.
HON. MUTSEYAMI: Madam Speaker. Is it not that the Hon.
Minister is giving a Ministerial Statement –[Inaudible interjections]- Madam Speaker, with all due respect to this House and for the appreciation of Members, facilities are here for the Hon. Minister to utilise for the good of Members and for the good of the journalists and everyone else as we deliberate and as he does the presentation. So, with the guidance of the Clerk, probably there is need to address that in the future because the Hon. Minister is a new Minister. The Hon. Leader of the House has to help the Hon. Minister so that we make progress in some of these things. Technology is here.
THE TEMPORARY SPEAKER: Precedence has always taken
its course and what we understand is even in the budget we have always had tables and they are provided in the Hansard. So, Hon. Members, let us be clear that we are going to receive the tables. These tables are just like what we always receive – the same as we receive in the budget.
HON. GONESE: Through you Madam Speaker. I just wanted to
clarify that we must distinguish between the Budget Statement and a Ministerial Statement because a Ministerial Statement is just presented today and we seek clarifications today and that is the end of it, whereas with the Budget Statement, we have got more than a week or two weeks to debate. So, for the future, we just want it on record that there is a distinction between the presentation of the two so that in future we can be able to follow with presentation on the screen. It is not like a Budget Statement where we can then debate afterwards. I stand to make the point Madam.
THE TEMPORARY SPEAKER: That is now a future plan that
you are proposing. So, in future like what you were suggesting, I am sure the administration is going to take note of that.
THE MINISTER OF JUSTICE, LEGAL AND
PARLIAMENT AFFAIRS (HON. ZIYAMBI): Mr. Speaker Sir, I indulge the Chief Whips so that we could have a good presentation and we could all ask questions but the Hon. Members insisted that we proceed. I acknowledged and the chief whips acknowledge that this was a matter of importance and you refused. The Minister was prepared to bring all those technological issues and you refused. So, I had indulged the Chief Whips.
THE TEMPORARY SPEAKER: Order Hon. Members. Thank
you Hon. Leader of the House. For future like what the Hon. Leader of the House has said, he is going to make sure that that is going to be availed. Since this was done because you requested for it, I am sure, let us let the Hon. Minister be able to proceed.
THE MINISTER OF FINANCE AND ECONOMIC
DEVELOPMENT (HON. PROF. M. NCUBE: Thank you Madam
Speaker. Let me proceed. I had explained about the changes to revenues. Let me explain changes to expenditure net lending where in the budget we had a figure of $7.7.65 billion. It will now be $12.271 billion. Within that in terms of just current expenditure, that figure for that item will change from 5.228 billion to $8.073 billion. When we look at capital and net landing, the figure is expected to increase from $2.037 billion to
4.198 billion.
All this implies basically a primary balance when you compare expenditures to the revenues that we are collecting. The primary balance is negative and we are expecting a minus $1.215 billion. It will now be minus $2.005 billion. This new figure amounts to just below 5% of GDP. So we are still on target in terms of our target way show of GDP of 5% and below as pronounced or as expected in the Budget Statement for 2019.
Let me now turn to sector performance beginning with agriculture having now dealt with the fiscal framework and so forth. The first quarter marks the end of the 2018/2019 agricultural season. This year’s second half of 2018/2019 season was characterised by a dry spell, especially on the southern parts of the country. Generally, in most parts of the country crops were showing signs of moisture stress with condition ranging from poor to good, depending on the amount of rainfall received in respective areas.
In addition Cyclone Idai brought some floods in Manicaland and Masvingo provinces which destroyed crops and livestock and thus worsening the already severe situation. In terms of the first round crop and livestock report, this is what has come out as an assessment for the performance of the agricultural sector. The first round crop and livestock report indicated a general increase in area planted for major crops, except for some grains and few other small crops which recorded a decline.
However, most crops succumbed to dry the spell, with significant area planted expected to be written off, especially in the southern parts of the country. In other parts of the country any planted crop stood a chance to be harvested while the late planted crop is most likely to be written off. The set of numbers that are coming out through this first round assessment report is a drop in the hectorage of maize planted to the tune of minus 7% but we expect an increase in the area of sorghum of plus 7% on pearl millet down at minus 4%. This is just an example of some of the areas which have been impacted.
Also ground nuts we expect a drop in output at least as exemplified in the areas under cultivation of minus 30%. Cow peas, minus 26% and sweet potatoes for example at minus 57%. So, these are some of the crops that have been impacted by the dry spell and this has impacted overall economic growth, while the full impact of the drought and the recent cyclone Idai on crop and livestock production is not yet clear and finalised. Agriculture production for 2018/2019 season is expected to decline. The final outturn for agriculture production is expected to be indicated in the ongoing second round crop and livestock survey and the date for that will become available in the not too distant future.
Let me turn to grain stocks. Grain stocks and GMB stood at 876 tons at the end of March, 2019 compared to 776 tons of maize and 100 tons of small grains. I have got a table trying to show that breakdown which summarizes those numbers that I have just mentioned. The stocks are adequate for human consumption for the next seven months.
However, in view of the current drought, importation is inevitable before the next harvest. Turning to the winter wheat, planting is in progress with about 2 7 00 hectares having been planted as at 5th May, 2019 out of 77 000 targeted hectares. The recommended winter wheat planting deadline is 31 May, 2019. Of the planted hectorage being private sector initiative.
Turning to tobacco, the tobacco auction floors opened on the 20th of March 2019 with only 3 888 kilogrammes being delivered to the floors on the day compared to 165 000 delivered on the same day last year. Average buying price on opening was 17% lower at US$1.83 per kilogrammme compared to US$2.22 paid for the same day last year 2018. As at March 2019, about 538 000 kilogrammes had been sold through the auction floors at an average price of US$1.67 per kilogramme. This falls short of the 6.8 million kilogrammes delivered for the same period last year at the average price of US$2.78.
However, by the 5th of May 2019, more deliveries were received to reach 59.8 million kilogrammes cumulatively valued at US$106.3 million although average prices remain depressed and below US$2 per kilogramme.
I must hasten to add that in terms of deliveries, tobacco from private farmers is about 10.9 million kilogrammes in terms of tobacco sold and those from the weightful of tobacco contract farming is about 49 million kilogrammes. The total is 59.9 million kilogrammes. In terms of value from the private farmers, it is 7.9 million while that from contract farmers is 88.4 million. The total is US$106.3 million. The average price from private farmers is US$1.63 per kilogramme whilst from contract tobacco is US$1.81 per kilogramme. So it is higher. The average for the season is US$1.78 per kilogramme compared to an average last year 2018 of US$2.87 per kilogramme. You can see that there is a drop in the average price by 38%.
Let me say something about the progress on 99 year leases while we are talking about agriculture. Government and the Bankers
Association of Zimbabwe agreed on a revised 99 year lease agreement in
2017. The revision enables the transferability of land in the event of default which was a major requirement by financial institutions. In this regard, it is Government’s expectation that farmers issued with the new lease agreements are able to borrow using the revised 99 year lease agreements as collateral. Any concerns from banks regarding the new 99 year leases are being addressed as and when they arise and in some instances, on a case by case basis.
Let me move on to farmer compensation. As outlined in the TSP, Government is committed to finalise compensation for all former farmers affected by the Land Reform Programme in accordance with the country’s Constitution and Zimbabwe’s obligations under bilateral agreements. The process also involves evaluation of assets to ascertain the extent of Government’s obligation to former commercial farmers owing to the huge magnitude of resource requirements for this issue. Government is also engaging development partners and other bilateral countries with a view to mobilising the requisite resources.
Meanwhile, since 2009 to date, a total of US$60.4 million was paid to 93 former commercial farm owners as compensation for immovable improvements.
In 2018 alone, US$12 million was paid towards the same to 29 farmers. In the 2019 National Budget, we set aside US$53 million for the same purpose, targeting the old and the distressed form of commercial farmers. Government representatives of former farm owners have been working together in identifying qualifying beneficiaries and the process is now complete. Currently, Government is in the process of vetting the identified members as a verification exercise to trigger disbursements.
Government would once again want to reiterate that compensating the affected farmers is a noble idea and is in keeping with our constitutional dispensation.
On the land audit, in 2018, His Excellency President Emmerson Mnangagwa ordered an expeditious completion of the land audit which is expected to rationalise ownership and farm sizes. Consequently, the Zimbabwe Land Commission (ZLC) undertook the first phase of the National Agricultural Land Audit which was conducted in ten districts across the country’s ten provinces between October and November last year. This only constituted 6% of the targeted land covering more than 18 000 farmers.
The audit indicated gross underfunding of the agricultural sector and recommended the establishment of a Land and Agricultural Bank to facilitate funding for resettlement farmers. It further recommended an integrated Land Information Management System (LIMS) to address shortcomings related to fraudulent land allocations, rampant illegal leasing of land parcels and gross under utilisation which is materially affecting agricultural output.
Preparations for the second phase would be rolled out at the end of
May in all the remaining districts across the country’s ten provinces.
The land audit will help inform Government’s agricultural policies and development of strategies for increasing productivity and also promote social equity and environmental sustainability.
Madam Speaker maam, let me turn to the mining sector. Government is seized with addressing challenges facing the mining sector and this mainly relates to foreign currency shortages. The objective is to reverse output losses experienced during the first quarter where all minerals except for chrome were subdued compared to the similar quarter of 2018. All minerals were down in the first quarter except for chrome. For example in terms of gold, I will put all the percentages looking downwards. The same applies to nickel and coal. Chrome is up, palladium is down and diamond in terms of carats also is down in terms of output.
Looking ahead, 2019 overall projected output targets are achievable with most target minerals such as gold, nickel, chrome and platinum first quarter contributions constituting more than 20% of total expected output for the year.
Let me turn to the international mineral prices. Average gold prices for the first quarter of 2019 improved by 6% to an average of
US$1 304 per ounce from US$1 228 per ounce in the last quarter of 2018. At the same time, platinum prices were relatively flat with an average of US$822 per ounce. Palladium prices increased to US$1 435 in the first quarter of 2019 from US$1 157 per ounce recorded in the last quarter of 2018.
Let me turn to the manufacturing sector. Performance of the manufacturing sector continues to be restrained by challenges related to financing, utilities, inputs supply and foreign currency availability. The sector is therefore expected to record marginal growth of only 0.1% in 2019.
Out drivers for this marginal growth include, obviously food stuffs and non-metallic mineral products with the rest of the other sectors remaining constrained. So, there are constraints everywhere right through the manufacturing sector which then results in this marginal increase in growth of 0.1%. In the outlook, the performance of the sector is expected to benefit from improved investment following the latest round of ease of doing business reforms and the enactment of the
ZIDA Bill which is now before Parliament.
In addition, the local content policy and also support the industrialisation policy being finalised by the Minister of Industry and Commerce will support domestic firms and increase production through utilisation of local factors of production. It remains critical, that as Government we explore private sector financing facilities required for supporting industry recovery, production as well as export growth.
Let me turn to the area of energy Madam Speaker and speak to the issue of electricity. Electricity generation during the first quarter of 2019, although higher than the target was relatively lower compared to the last quarter of 2018. Reduced production trend is attributable to lower water allocation at Kariba Hydro Power Station following erratic rainfall over the Zambezi catchment area. In addition, generation instability at thermal power stations has been worsened by inconsistent coal supply. Higher demand particularly during the just started winter season against reduced supply has given rise to load shedding.
In the outlook, electricity generation is expected to remain constrained during the larger part of the year before the new rain season commences. Given the situation, Government is working on increasing imports from the region among other interventions. In the area of fuel, the country is facing erratic fuel supplies which negatively impact on industry operations as well as transportation. Key factors that explain this challenge include growth demand owing to increase in number of automobiles, economic activities by economic players and limited financial capacity to import being exemplified by the shortage of foreign currency.
It has also been observed that owing to pricing distortions, fuel leakages are being experienced driven by arbitrage activities as the fuel locally is far too cheaper relative to other countries within the region. In order to curb arbitrage leakages in the fuel sector, Government in January 2019 adjusted the prices of diesel and petrol by 150%. Since then, fuel prices except for gas and paraffin have generally remained stable. Similarly, the usage of diesel and petrol in the country has slowed down. Diesel valued at US$138.7m was imported during the first two months of the year compared to US$224m imported in the last two months of 2018. On the other hand, petrol worth US$74.3m was imported over the same period compared to US$105m of the last two months in 2018. Government is making all arrangements to ameliorate the fuel supply situation by the provision of additional lines of credit to make sure that fuel supply is increased and is less erratic.
Let me turn to inflation developments. Inflationary pressures despite remaining relatively high slowed down compared to the previous quarter. This reflects a positive impact of fiscal consolidation in the liberalisation of the exchange rate and tight monetary policy measures.
Indeed, annual broad money supply has significantly slowed down from 45% in July 2018 to current levels of around 25% and this is year on year. However, on a month to month basis, money supply growth is zero to negative. This declining trend is expected to continue during 2019 in a way that is consistent with the TSP targets.
Declining money supply growth is a key factor to containing inflation in the long run. To be precise, month on month inflation during the quarter average 5.6% against 11.5% in the last quarter of 2018. Due to the elevated base annual inflation recorded 57.6%, 59.5% and 67.8% in January, February and March of 2019 respectively.
The parallel exchange rate market premiums have remained the major source of inflation driving up prices particularly prices of tradable goods. During the quarter, food and non-alcoholic beverages, restaurants, furniture, clothing experienced major price hikes reflecting unethical behaviour by most businesses by way of indexing prices to the parallel market exchange rate. In the outlook, inflation is anticipated to gradually subside as impact of fiscal consolidation and tight monetary policy measures restrain demand. Similarly, the gap between the interbank market and the parallel exchange rate is anticipated to narrow down.
Let me turn to the market for equities, the Zimbabwe Stock Exchange. Mixed trading characterised the equities market in the first quarter of 2019. While the market started at the year with positive gains in January, some losses were suffered during the month of February and
March 2019.
The industrial index gained 38.77 points or 8% in the month of
January 2019 before incurring losses in February and March 2019. Subsequently, the industrials lost 81.77 points or 16.7% in the first quarter and closed March 2019 weaker at 405.57 points. The mining index started the year at a low note of 227.71 by end of January. The index lost 15.58 points which is (-6.4%), before further losing more ground in February and March 2019. Resultantly, the resources index had accumulative losses of 33.73 points or minus (-14.8%), during the first quarter and closed the month of March 2019 softer at 193.98 points.
The top ten index declined by 30.41 points or (21%) during the period under review, closing first quarter of 2019 at 114.61 points. The ZSE top ten index measures the performance of the listed top ten heavy weight counters and represents 65 to 80 percent of the full market value.
The all share index, which tracks the changing average value of share prices of all companies on the market lost 24.58 points or (-
16.8%).
Overall, the market capitalisation of the ZSE decreased by (17.2%) from 19.3 billion at the beginning of the year to 16.8 billion at the end of the first quarter of 2019.
Let me turn to fiscal performance. Madam Speaker, fiscal consolidation and stabilisation measures in the TSP and the 2019 National Budget are paying dividends with revenue collections for the first quarter of 2019, performing above target by US146m, while expenditures were contained below the target of US$218.9m.
As a result, the budget surplus of US$443.1m was realised during the quarter, creating additional space for financing capital and social development programmes and unforeseen exigencies related to drought in the impact of Cyclone Idai. Cumulative tax and non tax revenue collection for the first quarter of the year out-performed targets by 8.2% to a record US$1.9billion against a target of US$18 billion resulting in a positive $146 million or 8.2%. This performance represents a 64.1% increase from the collections of $1.2 billion recorded during the same period in 2018 and a 13.9% increase compared to the $1.7billion collected in the fourth quarter of 2018.
Among other measures, improved tax revenues during the first quarter of 2019 was attributable to the strengthening of ZIMRA collection systems, plugging of tax loopholes as well as the review of the excess duty from $0.45 to $2.31 per litre of petrol and from $0.4 to
$2.05 per litre for diesel, which generated additional revenues of RTGS$146 million during the month of February.
The performance also benefited from the 2% tax, the IMTT tax, which generated monthly average revenues of RTGS$95 million against a target of RTGS$50 million. Compared to the previous year, the first quarter performance represents a 64.1% increase from the 2018 collections of $1.2 billion.
Proportionally, tax revenue continues to account for the greater percentage of total revenues at 97.4% of total revenues, while non-tax revenues, $49.2 million, which basically is a contribution of 2.6% only. The positive performance in revenues continued into April, 2019, with the revenues of RTGS$846.8 million being realised against a target of
RTGS$731.9 million. In the outlook, revenues are projected at RTGS$9.3 billion by the end of 2019.
Let me turn to expenditure issues Madam Speaker Ma’am.
Between January and March, expenditures were managed and remained at $1.5 billion against a planned spending of $1.7 billion, to give savings of $218.9 million from reduced outlays towards operations and maintenance as well as delayed expenditures on capital programmes.
Major expenditures were on employment costs at about $1billion. Operations and maintenance were at $185.6 million and interest payments at $93.3 million and capital projects at $174.8 million.
Looking at employment costs, they were at 64.4% of total expenditures and they continue to dominate expenditures. However, the increase in employment costs to total expenditure in 2019 is largely due to the cushioning allowance, pension reviews and filling of critical posts in the education and health sectors as well as the effect of the introduction of the new exchange rate, which then impacted salaries as well as foreign missions salaries as from February, 2019.
Turning to capital and Net Lending, Capital Expenditure and Net
Lending constituted 11.7% of total expenditure during the first quarter of 2019. The 2% IMTT tax which was ring-fenced has gone a long way in supporting the social sector in terms of the health sector and education and meeting the demands for the devolution budget of $310 million as well as meeting the demands for the impact, rather the damages caused by Cyclone Idai, drought and some infrastructure costs.
Let me turn out to devolution. In 2019, the National Budget allocated $310 million for the devolution programme, under which resources are to be distributed to provincial and local tiers in line with the constitutional provision under Chapter 14 on devolution.
HON. GONESE: On a point of order Hon. Speaker.
THE TEMPORARY SPEAKER (HON. MAVETERA): What
is your point of order.
HON. GONESE: Thank you Hon. Speaker. My point of order is in terms of Standing Order No. 204. Madam Speaker, cognisant of the fact that automatic adjournment of the House is at Five Minutes to
Seven o’clock and in terms of Standing Order No. 204, there is a provision which allows for the suspension of Standing Orders. I have looked at the Standing Order in question; I am looking at the presentation by the Hon. Minister and the pages he still has, it is evident that he will not be through with his presentation before 7 o’clock and afford us time to seek clarifications as we are entitled to do in terms of standing orders.
I then seek your indulgence as the Speaker because in terms of Standing Order 204, this motion normally requires notice. However, there is a proviso which gives you the discretion. Today, you have got a
very important role Madam Speaker Ma’am. It says that; ‘provided that in cases of urgent necessity of which the Speaker must be the Judge, any such orders may, with the Leave of the House, be suspended upon motion, moved without notice. So, it entitles me to move this motion without notice in terms of the proviso to Standing Order 204, which opportunity I am using Madam Speaker.
So, I am now appealing to you, in view of the importance of this
Ministerial Statement, it would be an injustice Madam Speaker Ma’am, for the presentation to be interrupted by the automatic adjournment of the House. It would be a grave injustice, not just to the Hon. Members in this august House but to the people of Zimbabwe to have a situation where, firstly, the statement is not completed, the presentation is not completed. So, we have this opportunity Madam Speaker Ma’am, firstly, we seek the exercise of your discretion, which you have. So, you have got that power in your hands to allow us to move this motion –
[HON. MEMBERS – Inaudible interjections.] –

THE TEMPORARY SPEAKER: Order in the House – [HON.
NDUNA: Madam Speaker Ma’am.] – Hon. Nduna, you do not stand when we have got another point of order that has been given. Thank you very much Hon. Gonese for that note, but according to what we had already previously said, we had said to you that there was no urgency on this issue and since there was no urgency on this issue and you knew very well according to Standing Order Number 51 that we needed to adjourn at five minutes to seven o’clock. So, there is no urgency on this issue – [HON. MEMBERS: Inaudible interjections.] –
It being Five Minutes to Seven o’clock p.m. THE TEMPORARY SPEAKER (HON. MAVETERA), interrupted the business under consideration in terms of Standing Order Number 51 (1) (a).