The country’s recent tax adjustments may be in line with the International Monetary Fund (IMF)’s proposition that Sub-Saharan economies have potential to increase revenue through tax reforms.
The IMF 2018 annual report estimates that Sub-Saharan Africa could mobilise up to 5 percent of gross domestic product in additional tax revenues, adding that to tap this potential, countries must continue with efforts to modernise tax administration systems and broaden the tax base.
According to the IMF, Zimbabwe is among other Sub-Saharan economies which draw above 18 percent of their total GDP from taxation.
The IMF thus foresees a remarkable growth in income if the region can come up with modernised tax reforms that can expand the country’s revenue incomes.
In light of the recent developments in the country, the central bank estimated a 4.5% GDP growth by year end and coupled by the recently announced 0.2% tax reform, the country has potential to surpass the set target as well as cut the debt deficit currently crippling economic growth.
In its report, the IMF further challenged Sub-Saharan Africa economies to set up investment-friendly policies that attract private investment as they have lagged behind in that area as compared to other regions.
The institution further noted that improved regulatory and insolvency frameworks, deeper financial markets, and trade liberalisation are key in attracting and growing investment in the economy as these are critical for sustainable and inclusive growth.
Analysts have hailed the recent tax reforms as key in settling government debt and laying a strong recovery path towards the introduction of our own currency.