Zimbabwe Finance Minister Mthuli Ncube said on Monday he would propose a 900 billion Zimbabwe dollar ($9.68 billion) budget for 2022, more than double this year’s total, as the country struggles with surging inflation.
In July, Ncube had signaled plans for a 579 billion Zimbabwe dollar budget in 2022 and the latest upwards revision signals how inflation is impacting the government’s planning.
“The overall 2022 budget envelope is ZWL$900 billion. However, my last count of the bids submitted by line ministries indicates resource requirements in the excess of ZWL$3 trillion,” Ncube told lawmakers at a pre-budget meeting.
“Surely, this is beyond our capacity, and more fundamentally, poses challenges from a prioritization point of view,” Ncube said, without giving any indication what plans would be dropped.
The 2021 budget is worth 421.62 billion Zimbabwe dollars.
Although year-on-year inflation has slowed down to 51.55 percent in September from a high of 837.53 percent in July 2020, the government says inflation could quicken towards the end of the year due to rising international energy and food prices as well as a weaker local currency.
The central bank has had to revise its year-end inflation target twice this year. Inflation is now expected to close the year in the 35 percent to 53 percent range, after the initial forecast of below 10 percent.
Ncube brought back the local currency in 2019, ending a decade of dollarisation. However, the local unit has rapidly lost value since its return.
The government has, in recent weeks, cracked down on black market foreign currency trade in a bid to stop the slide in the currency’s value.
Although the official exchange rate of the Zimbabwe dollar is 93 to the US dollar, the local unit is trading much weaker on the unofficial market, with some rates as low as 200 to the greenback.