HARARE – Finance minister Mthuli Ncube on Thursday presented a ZiG290 billion (US$9.5 billion) 2026 national budget, touting fiscal discipline, falling inflation and mining-led growth as the pillars expected to carry Zimbabwe into the second phase of its economic plan.

The budget forecasts revenues of ZiG288 billion (US$9.4 billion) against expenditures of ZiG290 billion (US$9.5 billion), leaving a narrow ZiG3.2 billion deficit (US$105.9 million) – equivalent to just 0.2 percent of GDP.

Ncube said the tight fiscal stance was designed to “sustain macroeconomic stability” as the country enters the National Development Strategy 2 period.

Consumers will face immediate pressure from a 0.5 percentage point increase in VAT, which rises to 15.5 percent from January 1, 2026.

To offset this, government is reducing the Intermediated Money Transfer Tax (IMTT) from 2 percent to 1.5 percent on ZiG transactions, part of efforts to encourage usage of the local currency. IMTT will also become tax-deductible, lowering business costs.

A new Digital Services Withholding Tax will apply to payments to offshore platforms such as e-hailing apps, online content providers and satellite internet firms.

In a major shift likely to lift mineral revenues, gold royalties have been standardised across all producers. The new structure will see 3 percent charged on prices up to US$1,200/oz; 5 percent between US$1,201–2,500/oz and 10 percent above US$2,501/oz.

The government also moved to liberalise gold trading, allowing individuals and authorised dealers to possess, sell, pledge or trade certified gold bars under regulated conditions – a step intended to open gold investment to the public and improve traceability.

The minister projected 5 percent growth in 2026, following an estimated 6.6 percent expansion in 2025, driven by agriculture recovery, stable inflation expectations and steady mineral prices.

Annual ZiG inflation stood at 32.7 percent in October 2025, but Ncube said the government expects single-digit inflation next year, a target economists will scrutinise after the VAT increase.

Zimbabwe remains heavily supported by its expatriate population. Remittances are expected to reach US$2.7 billion in 2025 and US$2.8 billion in 2026, helping drive a current account surplus of US$961 million in the first nine months of 2025.

Education, health and social support dominate the spending plan. The vote for primary and secondary education is ZiG47.4 billion (US$1.55 billion); health and child care ZiG30.4 billion (US$997 million) and social protection ZiG12.7 billion (US$416 million).

Education receives the single largest vote, supporting salaries, new classrooms and school equipment. Health funding targets primary care and rural access.

Agriculture receives ZiG26.8 billion (US$880 million) for irrigation, dam projects, livestock programmes and grain reserves which Ncube said were priorities after recent drought shocks.

On major infrastructure projects, Ncube set aside ZiG4.6 billion (US$151 million) for the Harare–Masvingo–Beitbridge highway and Bulawayo–Victoria Falls road upgrades.

Under water and sanitation, Ncube directed ZiG1.1 billion (US$36 million) to Kunzvi Dam, Gwayi-Shangani Dam and borehole drilling.

For housing, the finance minister set aside ZiG948.9 million (US$31 million) for regulatory reforms and on-site infrastructure servicing.

He said the projects are intended to stimulate jobs and investment.

The security sector remains heavily funded with an allocation of ZiG46.8 billion (US$1.53 billion) covering recruitment, training, accommodation, vehicles, and implementation of the Military Salary Concept.

The government is offering targeted incentives to firms that transition to 24-hour production, including additional tax deductions and accelerated depreciation allowances.

A more generous package is aimed at Business and Knowledge Process Outsourcing (BKPO) firms who get 15 percent flat corporate tax, 100 percent first-year capital allowance, duty suspension on equipment, US$1,500 per employee tax credit under YETI and 15 percent flat tax on essential expatriate staff.

Treasury sees BKPO as a high-growth, employment-intensive sector capable of generating foreign currency.

Official Development Assistance is projected to fall to US$350 million in 2026, down from the US$500 million targeted for 2025 – a 30 percent decline that could stretch social services dependent on donor support.

Ncube’s 2026 budget continues the government’s push to brand Zimbabwe as fiscally disciplined following years of volatility. The near-zero deficit is its centrepiece.

But risks could threaten the projections, analysts warned. VAT rise may pressure prices, undermining inflation targets while mining and remittances, the twin pillars of revenue, are exposed to global volatility. – ZimLive