Preparing for the 2019 Budget Proceedings at the Parliament According to the World Bank, for Zimbabwe, the year 2018 was marked by subdued economic growth – projected at 3%, down from 3.2% in 10 2017. The World Bank stated that the year started on solid ground in terms of global appetite for re-engagement, but this appetite fizzled out particularly in the aftermath of the elections. By and large the international community began to cite insincerity in the government’s desire to turn over a new leaf in democratic practices. The country’s protracted fiscal imbalances constrained capital and development expenditure and social service provision, undermining poverty reduction efforts. Over 90% of the government budget was consumed by the wage bill of the civil service. According to the Reserve Bank of Zimbabwe, annual headline inflation increased by 11.09% to 42.09% in December 2018, from 31% in November 2018. Zimbabwe’s unsustainable fiscal deficit widened from 8.5% in 2016 to 15.2% in 2017 and was projected to surpass that level in 2018. The government was financing the fiscal deficit largely through domestic borrowing from both commercial banks and Central Bank using an overdraft facility. The overdraft created electronic deposits or Real Gross Time Settlement (RTGS) in the banking system allowing the government to make payments without concomitant increases in US dollar cash balances. This resulted in a mismatch between $US cash balances and RTGS balances. Cash US$ versus RTGS dollar exchange rate weakened (from US$1:1.4 RTGS in January 2018 to over 1:2 at end September 2018). The World Bank stated that the year started on solid ground in terms of global appetite for re-engagement, but this appetite fizzled out particularly in the aftermath of the elections. The public sector which comprised of most employees in the country did not adjust their employee salaries to reflect inflation and shifts in exchange rates, bearing in mind the 1:1 regime officially maintained between the United States Dollar and the Zimbabwean bond. 10. https://www.worldbank.org/en/country/zimbabwe/overview 18 STATE OF HUMAN RIGHTS REPORT ZIMBABWE 2018