An investigation into the effect of budget deficit on the economic performance of Zimbabwe

ABSTRACT

The study investigated the impact of budget deficit on the economic performance of Zimbabwe for the period 2000–16. Using secondary data sourced from the International Monetary Fund (IMF), Zimbabwe National Statistics Agents (ZIMSTATS), World Bank and the Reserve Bank of Zimbabwe (RBZ) websites, the study estimated the relationship between budget deficit and economic performance using ordinary least squares (OLS) methods. The estimated results revealed a negative and significant relationship between budget deficit and economic performance in Zimbabwe. The study inferred that Zimbabwe’s huge budget deficit could be driven by recurrent expenditure such as salaries. We recommend the need for the government to have fiscal discipline and to channel resources towards the productive sectors of the economy such as capital projects for long term development.

KEYWORDS:

• Budget deficit
• Zimbabwe
• ordinary least squares

Acknowledgement

We would like to acknowledge Lupane State University for according us the time to carry out this research. We would also like to acknowledge the input from our colleagues and all those who helped us with the much needed data.

Disclosure statement

No potential conflict of interest was reported by the author(s).