Extracting from the People: A Critical Analysis of Zimbabwe’s 2026 National Budget

By Youngerson Matete 

On the 27th of November 2025, the Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, presented the national budget to Parliament. A national budget is a government’s financial plan for a fiscal year, detailing revenues, expenditures, and priorities in resource allocation. It serves as a tool of fiscal policy to influence economic growth, employment, inflation, and social redistribution while maintaining fiscal sustainability.

Every national budget tells a story. It reflects a government’s priorities, outlines its development strategy, and communicates its vision to citizens. The 2026 Zimbabwe National Budget, presented under the theme "Enhancing Drivers of Economic Growth and Transformation Towards Vision 2030," aspires to be a transformative instrument designed to stimulate economic growth, attract investment, and ensure inclusive development. Yet, for ordinary Zimbabweans, the budget presented by the Minister contrasts sharply with lived realities. Inflation remains high, unemployment entrenched, and informal labor dominates the economy. Households struggle to meet basic needs, while public confidence is further undermined by persistent corruption, unpaid obligations, and unchecked illicit financial flows. Consequently, the 2026 budget prioritizes revenue extraction over social protection, demanding contributions from citizens without offering mechanisms to safeguard livelihoods or reduce vulnerability.

One glaring indicator that the budget is anti-people is the increase in Value Added Tax. VAT is a regressive consumption tax, meaning it disproportionately affects low-income households that spend a larger share of their income on basic goods and services. In a high-inflation environment, raising VAT functions not as a growth-stimulating measure but as a tax on survival. Producers facing higher tax-inclusive costs inevitably transfer these onto consumers, particularly in markets with weak competition. As a result, households bear the brunt of rising prices, reducing real income and purchasing power.

Equally important, the Minister raised taxes without increasing the wages of civil servants. The average government worker earns around USD 200.00, stagnant wages coupled with high unemployment exacerbate the burden. Approximately 88% of Zimbabweans are engaged in informal employment, many in precarious conditions with low income and limited social protection. For these individuals, VAT increases is not merely fiscal adjustments. It constitute direct economic shocks that deepen poverty, with no compensatory mechanisms in place.

Similarly, the government’s continued reliance on the Intermediated Money Transfer Tax illustrates the regressive nature of revenue collection. By taxing electronic transactions, IMTT discourages participation in the formal financial system and pushes economic activity into informal cash-based channels. This, in turn, reduces the velocity of money in the formal economy, weakens banks’ ability to mobilize deposits, and undermines the effectiveness of monetary policy. In this way, a tax intended to raise revenue paradoxically limits the state’s capacity to facilitate growth through financial intermediation.

Beyond these measures, the newly introduced withdrawal levy on foreign-currency accounts represents a particularly regressive and counterproductive fiscal instrument. By taxing individuals and businesses simply for accessing their own money, the government imposes a direct cost on liquidity, effectively constraining household and business cash flow. What is more, in economic terms, this constitutes a liquidity constraint, reducing the funds available for consumption, savings, and productive investment. Citizens, particularly small business owners and exporters, are forced to hold cash outside formal banking channels to avoid these charges, undermining the financial intermediation process. Consequently, banks are unable to mobilize deposits for lending, stifling credit creation and limiting the growth of productive sectors. By discouraging participation in the formal financial system, the levy reduces the efficiency of monetary policy, weakens capital markets, and creates a climate of mistrust between the state and its citizens. Therefore, the withdrawal levy not only burdens ordinary Zimbabweans but also threatens the broader financial architecture needed for sustainable economic growth.

On top of this, the decision to maintain a 96 percent import duty on vehicles highlights the anti-people orientation of the budget. Zimbabwe produces almost no vehicles domestically, with only one small plant operating at limited capacity. Imposing a 96% duty, combined with 15.05 % VAT, effectively taxes consumers over 111 % just to acquire a car. This policy neither protects domestic industry nor supports economic growth. Instead, it incentivizes corruption and smuggling, as consumers and intermediaries resort to backdoor imports. As a result, legitimate revenue collection is undermined while illicit channels thrive, feeding rent-seeking behavior and weakening the fiscal system. In this context, the budget prioritizes revenue extraction over citizen welfare, creating incentives for evasion rather than compliance.

Similarly, the government’s decision to maintain excessively high tollgate fees represents another regressive measure that disproportionately affects ordinary Zimbabweans. Economically, these fees function as a user-based tax, increasing the cost of transportation for both individuals and businesses, which in turn raises the price of goods and services across the economy. Small-scale traders and transport operators are particularly burdened, as higher transport costs reduce profit margins and limit market access, while consumers face increased prices for essential commodities. When toll fees are set above reasonable cost-recovery levels, they create incentives for evasion, corruption, and inefficiency, further undermining revenue collection. In effect, rather than serving as a fair and efficient funding mechanism for infrastructure maintenance, the inflated tolls act as an additional economic drag on households and enterprises already struggling under a heavy tax and cost burden.

Along with this, the 2026 budget provides zero social protection. There are no compensatory mechanisms, subsidies, or safety nets to shield vulnerable households from the regressive effects of VAT, IMTT, withdrawal levies, or punitive import duties. Citizens are expected to fund state operations without any guarantee of protection against economic shocks. Consequently, the fiscal burden falls heavily on those least able to bear it, deepening inequality and entrenching poverty.

Turning to growth projections, the government targets approximately 5% expansion, attributed to agriculture, mining, manufacturing, and tourism. However, these sectors face structural constraints that make such projections questionable. Agricultural output is highly sensitive to climatic variability and droughts, making it an unreliable driver of sustainable growth. Manufacturing suffers from chronic energy shortages, low productivity, high input costs, and supply chain disruptions. Mining, despite being a major source of foreign exchange, is plagued by governance challenges, illicit flows, and price volatility. Consequently, macro-fiscal forecasts that fail to account for these structural impediments risk overstating economic potential and creating unrealistic expectations for investors and citizens alike.

Similarly, the government’s reliance on GDP as a measure of progress is misleading. GDP captures the aggregate value of goods and services produced but fails to reflect the distribution of income, employment levels, poverty reduction, or the quality of public services. Non-inclusive growth, where GDP rises without tangible improvements in livelihoods, is particularly concerning in Zimbabwe’s context. If GDP growth were genuinely translating into improved living standards, one would expect higher employment, rising wages, and stronger social services. Nevertheless, ZimStat data shows persistent unemployment, entrenched informal labor, and widespread poverty, highlighting a disconnect between official rhetoric and economic reality.

Additionally, fiscal indiscipline compounds these structural weaknesses. Ministries reportedly spent only fifty-six percent of their 2025 allocations, reflecting poor planning and weak execution capacity. This underutilization represents both a betrayal of citizens who financed these initiatives through taxes and a missed opportunity to catalyze development. Critical infrastructure projects, schools, and healthcare services remain incomplete, stifling productivity and constraining human capital accumulation.

In the same vein, the government’s failure to honor payments to contractors exacerbates inefficiencies. Small and medium enterprises, construction firms, and suppliers endure delayed payments, which strangles cash flow and reduces investment capacity. When the state defaults on its financial obligations, the multiplier effect of public expenditure diminishes. Consequently, firms either withdraw from public tenders or inflate bids to offset payment risk, raising costs for the government and taxpayers while reducing market competition. Public investment, intended to stimulate growth, instead becomes a source of economic uncertainty and inefficiency.

Beyond these operational failures, procurement scandals further highlight systemic dysfunction. The construction of dams reportedly approaches a cost of USD 700 million, far exceeding regional benchmarks for similar projects. Overpricing points to rent-seeking behavior, elite capture, and systemic corruption rather than technical necessity. When a dam project consumes funds equivalent to multiple social ministries, public investment becomes a vehicle for private enrichment rather than national development. Similarly, allocations for governance and institutional reform appear symbolic, as corruption continues largely unchecked, eroding public trust and undermining fiscal policy effectiveness.

Equally critical is Zimbabwe’s rising public debt. With the debt stock sitting at USD 23.4 billion, the country faces a classic debt overhang. High debt levels divert scarce revenue toward interest and principal repayment, discourage private investment, and constrain the government’s ability to fund infrastructure, social services, or safety nets. Without transparency in debt management or credible restructuring plans, future generations are likely to bear the cost of today’s fiscal mismanagement, while current citizens remain exposed to economic shocks and underfunded public services.

Building on this, illicit financial flows and corruption further undermine revenue collection. Zimbabwe reportedly loses billions of dollars annually through smuggling, money laundering, and collusion, particularly in the mining sector. These leakages represent foregone revenue that could fund critical infrastructure, social services, and programs to reduce vulnerability. Consequently, when governments rely on consumption taxes, punitive financial levies, and high import duties while billions escape through corruption, ordinary citizens bear the cost while elites remain largely unaffected, reinforcing inequality and eroding public trust.

Taken together, these elements reveal a consistent pattern: the 2026 budget prioritizes revenue collection over citizen welfare, fails to provide social protections, and perpetuates structural inefficiencies that constrain growth. Policies such as VAT increases, IMTT, the withdrawal levy, and punitive import duties shift the fiscal burden onto households and small businesses. Unrealistic growth projections and reliance on GDP mask the underlying inequality and poverty that persist in Zimbabwe. Under-execution of budgets, unpaid contractors, procurement scandals, and corruption reduce the effectiveness of public spending, while high debt and illicit flows weaken the state’s fiscal capacity. Collectively, these factors illustrate that the budget is anti-people, extractive, and unlikely to generate inclusive development.

A credible alternative would focus on equity, transparency, and institutional reform. Revenue collection could be broadened by reducing leakages in mining, adding value to natural resources, improving tax compliance, and fostering formal-sector employment. Debt obligations to contractors should be honored to restore trust and stimulate investment. Social protections should be embedded to shield vulnerable households from the impact of regressive taxes and economic shocks. Furthermore, policies that encourage corruption, such as prohibitive vehicle import duties, should be revised to ensure transparent revenue collection while supporting economic efficiency. Only by addressing these systemic issues can Zimbabwe move toward inclusive growth and genuine transformation.

Until such reforms are enacted, the 2026 Budget remains a revenue-raising tool for elite consumption, outlining a future that never materializes while citizens bear the brunt of fiscal mismanagement. Vision 2030 will not be realized through aspirational language alone. It requires a fundamental transformation in fiscal governance, a commitment to transparency, equitable revenue instruments, and meaningful social protection measures that safeguard the most vulnerable. Otherwise, the gap between rhetoric and reality will continue to widen, leaving ordinary Zimbabweans to pay the price of a budget designed to extract rather than develop.

Youngerson Matete is a multi-award-winning pro-democracy and Human Rights activist, a Mandela Washington Fellowship Alumni, and a student of human rights and Politics. He is the founder of the African Institute for Young People. He writes in his own capacity. His views don't represent any organization.

Cell: +263 773 622 044

Email:youngmatete0@gmail.com/ director@aiyp.org.zw