Gvt acts on the rationalisation of subsidies

In a move to reinforce National Development Strategy 1 fiscal consolidation objectives, government has reaffirmed its position to curtail unmitigated and unbudgeted subsidies.

Government has also considered and approved proposals on the rationalization of subsidies whilst crowding out critical developmental expenditures.

Speaking at the post cabinet media briefing Minister of Information, Publicity and Broadcasting Services Monica Mutsvangwa said, NDS 1 is premised on the need for bold and transformative measures that will ensure achievement of the country’s vision of an Empowered and prosperous Upper Middle-Income Society by 2030.

“Subsidies that are being provided will have explicit identified funding sources, with costs adequately quantified to determine fiscal sustainability.

“The nation is informed that consistent with the overarching goal of the National Development Strategy 1:2021-2025 (NDS 1), it has become necessary that a guiding framework with regard to subsidies be established. Such a framework should ensure subsidies meet a specific public policy objective to remedy an identified market failure and are of the minimum size, necessary to achieve such an objective,” Mutsvangwa said.

It has been noted that, strict adherence to the framework provides the pathway to the attainment of Vision 2030.

“This requires discipline and dedication by all stakeholders to achieve the above macro-economic targets, including realigning our public finances that have been the major source of instability in the market,” Mutsvangwa said.

Clear guidelines have been set with principles such as explicitly budgeted and quantified for and approved through the budget, rigorous monitoring, with their cost being regularly quantified, along with an evaluation of their benefits; and use targeted approach so as to make sure that those benefiting from the subsidy are those originally targeted, who need them, and not to industries or individuals who can operate profitably without support, unless their activity has substantial positive outcomes for society.



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