PRESS STATEMENT ON ECONOMIC MITIGATORY MEASURES TO CONTAIN THE IMPACT OF CORONA VIRUS 2019 (COVID-19)
1. The Coronavirus 2019 (COVID-19) is spreading fast to the rest of the world, placing unprecedented pressure on humanitarian services as well as economic activities.
2. In view of the above impact of COVID-19 on the economy, Treasury has come up with the following mitigatory interventions covering both prevention and support to our productive sectors. Measures in support of production, will continue to be reviewed, in order to save lives and limit damage to the economy.
Fiscal Resource Mobilization
3. Treasury has since availed over ZWL$100 million to fight against COVID-19, and is ready to attend to further requests on this issue.
4. In order to augment resources required to alleviate the impact of the pandemic, Treasury is making the following proposals:
Expenditure Reprioritisation: Redirecting Capital Expenditure
5. Treasury is redirecting capital expenditure allocations under the 2020 National Budget towards health related expenditures including water supply and sanitation programmes. However, Government will continue implementation of selected priority programmes and projects to sustain the economy and these include roads and dam construction, irrigation and water and sanitation projects, among others.
6. The 2% Intermediated Money Transfer Tax (IMTT) which is currently ring-fenced for social protection and capital development projects and hence, will ordinarily be channeled towards COVID-19 related mitigatory expenditures.
7. Additional resources will constitute some cuts from respective Ministry allocations/budgets and details are being worked out. Treasury has issued a Circular of 20 March 2020 instructing line Ministries to identify areas for cuts and areas for redirecting expenditures.
Foreign Currency Mobilisation
8. A large part of the above resources will be required in form of foreign currency. Treasury is, therefore, working closely with the Central Bank in mobilising the requisite resources from all possible sources.
9. During the initial stages, Treasury availed US$2 million for urgent and immediate health related imports and will continue to mobilise and ring-fence the necessary foreign currency required for additional imports for the short to medium term.
Ring-Fencing COVID-19 Resources
10. Resources earmarked for mitigating the COVID-19 pandemic are being ring fenced to ensure achievement of planned activities. Treasury has directed the utilisation of the existing National Disasters Accounts to serve the purpose of this crisis.
Hiring of Additional Medical Staff
11. Treasury has also concurred to the unfreezing of over 4 000 health sector posts and creation of an additional 200 medical posts with a view of scaling the response to the COVID-19 pandemic.
Social Protection & Cash Transfers
12. Vulnerable groups in our society are the most exposed under this COVID-19 crisis. Accordingly, Treasury has set aside resources to cover one million vulnerable households under a Cash Transfer programme and payment will commence immediately.
13. The Social Welfare Department will use its usual mechanisms to identify the beneficiaries.
Support of Economic Activity/Relief to Productive Sectors
14. The demand and supply shocks all spell economic doom for the economy and this calls for a mixture of temporary short term relief measures covering at least three months. The measures should also balance the required support to productive sectors and the necessity for enhancing revenue to meet the various requirements during these difficult times. Accordingly, in addition to the above fiscal measures, the following measures are being implemented:
15. Treasury will ensure that ZIMRA expedites processes on refunds and requests for extension of the time period within which tax is payable without accruing interest and penalties for companies that shall experience COVID-19 related cash flow challenges.
Processing of VAT Refunds
16. Delays in the processing of VAT Refunds continues to affect business cash flows and in some instances compelling business to contract expensive short term funding. In this regard, ZIMRA is working on a program to expedite processing of VAT Refunds from the statutorily prescribed 60 days.
Suspension of Duties on COVID-19 Essential Goods
17. In recognition of the significance of the health sector, Government has availed a number of tax incentives for production and importation of essential drugs and health related capital equipment, as well as other medical supplies.
18. Furthermore, in order to enhance preparedness to fight the corona virus, and also guided by the United Nations Covid-19 Medical Supplies, Treasury further suspends duty and tax on various list of goods and services related to testing, protection, sterilisation, and other medical consumables, among others.
19. The Zimbabwe Revenue Authority will, with immediate effect, allow duty free importation of the above-mentioned goods, pending gazette of the necessary legal instrument.
20. Treasury has instructed PRAZ to review its procurement regulations with a view of facilitating speedy procurement of essential goods and services necessary during this difficult time. A circular to this effect has already been issued by PRAZ.
Capacitating Local Industry
21. Government is engaging and supporting the local industry to identify capacity to locally produce within the shortest possible time, basic food stuffs, and pharmaceuticals and provide services as an import substitution measure.
PRIVATE SECTOR SUPPORT
22. Government would like to acknowledge support and collaboration being made by our business community under the initiative “Business Fighting Covid-19”. Under this initiative, the business community has mobilised substantial financial and logistical resources to assist all Zimbabweans afflicted and affected by the pandemic.
23. This collaborative approach and unity of purpose to save lives is much appreciated and encouraged into the future in many facets of life.
DEVELOPMENT PARTNER SUPPORT
24. Development partners are also complementing Government efforts in a number of ways focusing on humanitarian assistance. Given the magnitude of the resources required to fight this crisis, Government will continue to approach and engage more development partners as well as well as our own private sector to combine towards fighting this pandemic.
25. To date, Government acknowledges support and pledges from the following development partners:
• United Kingdom Government;
• Chinese Government;
• USA Government;
• Global Fund;
• European Union
• Global Financing Facility – World Bank; and
• Chinese Foundation;
26. The virus is spreading very fast, therefore, Treasury will remain alert to further developments on this risk and will continue to explore all necessary measures to mitigate this pandemic for the good and safety of our people.
Hon. Prof. Mthuli Ncube
MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT
30 March 2020