## 1zweea2020002

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---

### Summary of mission outcomes and priority recommendations
- Mission: Harare, Zimbabwe during April 15–26, 2019 under EDDI 2 GFS Module.
- Objectives:
  - Review progress and assist with outstanding statistical issues including classification of government subsidies to SOEs.
  - Identification and classification of EBUs.
  - Correct classification of other government transactions in line with GFSM 2014.
  - Classification of government managed (nonautonomous) public sector pension fund transactions.
- Actions taken:
  - Expanded coverage of GFS for EBUs and public corporations; assisted identification of all EBUs and SOEs (preliminary lists transmitted by the Accountant General).
  - Assisted reclassification of Budgetary Central Government (BCG) transactions into GFSM 2014, including bringing some off-balance-sheet financing/recapitalization onto the balance sheet.
  - Assisted correct classification of transactions for government-managed (nonautonomous) public sector pension fund.
- Key findings:
  - Coverage is currently limited to BCG and paints a narrow picture of government financial activities.
  - Progress made but remains slow; long-term goal to compile comprehensive general government GFS given challenges including low adherence to PFMA (2009) and need for greater buy-in from senior officials.
- Priority recommendations (excerpt):
  - Enhance co-ordination and co-operation across ministries to share financial information for all public sector entities as defined in the PFMA.
  - MoFED to formulate and enforce clear punishment mechanisms for non-compliance with PFMA and PDMA (2015).
  - AG’s office to expand compilation of financial statistics to include all extrabudgetary funds, local authorities, and social security funds using a standardized GFSM 2014 format; short term: convert existing data; medium term: require GFSM 2014 compatible reporting.
  - Compile more detailed statistics to reflect all subsidies to public corporations; reclassify capital transfers where appropriate to reveal true subsidy flows.
  - Publish an updated list of all public sector entities including EBUs, local authorities, and SOEs. Mission prepared a preliminary list containing 210 extrabudgetary funds, 92 local authorities, and 105 SOEs (being validated for publication).
- Selected priority timetable (Table 1 — selected items):
  - September 2019: Complete a comprehensive list of general government units (including EBUs) approved by all ministries. — Responsible: MoFED
  - June 2020: Convert existing EBU financial data into a GFSM 2014 presentation across all ministries. — Responsible: MoFED and other relevant Ministries
  - June 2020: Convert existing local authority financial data into a GFSM2014 presentation for all 92 authorities. — Responsible: MoFED and MoLG
  - September 2020: Move towards full reporting of GFS data (including a financial balance sheet) for all general government subsectors in a GFSM2014 format. — Responsible: MoFED and other relevant Ministries

### Legal framework governing GFS in Zimbabwe
- Primary law: Republic of Zimbabwe Public Finance Management Act (PFMA, 2009). PDMA (2015) also referenced for public debt.
- Findings:
  - PFMA compliance remains largely not met; leads to lack of transparency, accountability, and sound management of public sector finances.
  - AG’s office should set a standardized reporting format across all subsectors; reporting should be timely to MoFED. Ministries should report financial difficulties per PFMA Part V, Section 49 (2).
  - AG currently receives sufficient information only to produce consolidated GFS for BCG. Non-standardized reporting by subsectors (EBUs, local governments, public corporations) hampers consolidation.
  - Public corporations report under IFRS and/or IPSAS, leading to diverse formats and limited usability for MoFED monitoring.
- Recommended action:
  - Review PFMA compliance across all Ministries and enforce requirements; improve cooperation among stakeholders and strengthen enforcement mechanisms.

### General government finance statistics — institutional coverage and procedures
- Institutional coverage:
  - Government has fairly accurate records of institutional units but needs a centralized consistent list, especially for EBUs.
  - The multiplicity and dispersed management of EBUs across ministries is the most significant challenge.
- Mission assistance and administrative measures:
  - Drafted a circular (Appendix V) highlighting PFMA requirements and attached list of 210 EBUs and 105 SOEs compiled during the mission; circular sent to all ministries and stipulates denial of funds to non-reporting entities.
  - AG’s office agreed to hire a team dedicated to compiling standardized financial information for these entities.
- Reporting status:
  - Zimbabwe has only reported GFS for BCG; no data for other subsectors reported to IMF Statistics Department since 2009.
  - Mission produced GFSM 2014 bridge tables using outturn data for 2015–2017 and authorities committed to send this data for publication in the 2019 GFSY.

### GFS for Budgetary Central Government (BCG) — overview and reclassifications
- Institutional units:
  - BCG consists of around forty-five institutional units.
  - Six non-autonomous social insurance schemes for public sector employees: Public Sector Pension Fund (PSPF), Grain Marketing Board Pension Fund (GMBPF), Local Authority Pension Fund (LAPF), National Railways of Zimbabwe Pension Fund (NRZPF), Unified Councils Pension Fund (UCPF), Zimbabwe Electricity Supply Authorities Pension Fund (ZESAPF).
- Accounting and classification adjustments made by mission:
  - Capital transfers in Zimbabwe outturn data were reclassified as subsidies where transfers are tied to production/activity levels, consistent with GFSM 2014 guidance; government should provide better breakdowns.
  - Activities of government nonautonomous pension funds reclassified to match cash accounting used in Zimbabwe:
    - Employee pension contributions classified as other social contributions in government revenue and as actual social contributions in government expense.
    - Pension benefit payments recorded as employment-related social benefits.
    - Note: cash-based system does not record pension liabilities; recommendation to move to a modified cash-based system that begins to record obligations below the line.
  - Some below-the-line financing and recapitalization operations previously off-balance-sheet (e.g., RBZ through ZAMCO; transfers to public corporations) were brought onto the BCG balance sheet because government assumed these financial commitments. Result: government liabilities increased and the government deficit increased to account for transfers to public corporations.
- Time series conversion:
  - Mission created GFSM 2014 bridge tables for 2015–2017 and compared GFSM 2014 conversion with MoFED outturn and IMF WEO data.

### Key aggregated statistics and trends (GFSM 2014 conversion, 2015–2017)
- Net lending/net borrowing:
  - Figures show NLB comparisons for 2015–2017 across IMF WEO (April 2019), MoFED outturn, and GFSM 2014 conversion.
- Expenses (BCG, Billion USD):
  - Expense 2015: Total Expense 4.35
    - Compensation of Employees 2.14
    - Subsidies 0.40
    - Use of Goods and Services 0.33
    - Grants 0.62
    - Interest 0.09
    - Social Benefits 0.43
  - Expense 2016: Total Expense 5.19
    - Compensation of Employees 2.28
    - Subsidies 0.75
    - Use of Goods and Services 0.33
    - Grants 0.75
    - Interest 0.14
    - Social Benefits 0.48
  - Expense 2017: Total Expense 6.26
    - Compensation of Employees 2.50
    - Subsidies 1.27
    - Use of Goods and Services 0.83
    - Grants 0.69
    - Interest 0.30
    - Social Benefits 0.52
- Revenue (BCG, Billion USD):
  - Revenue 2015: Total Revenue 3.79
    - Taxes on Goods and Services 1.78
    - Individual Income Tax 0.77
    - Corporate Income Tax 0.42
    - Taxes International Trade 0.34
    - Social Contributions 0.03
  - Revenue 2016: Total Revenue 3.53
    - Taxes on Goods and Services 1.65
    - Individual Income Tax 0.74
    - Corporate Income Tax 0.34
    - Taxes International Trade 0.27
    - Social Contributions 0.14
  - Revenue 2017: Total Revenue 3.81
    - Taxes on Goods and Services 1.80
    - Individual Income Tax 0.73
    - Corporate Income Tax 0.48
    - Taxes International Trade 0.30
    - Social Contributions 0.12
- Notable trends and magnitudes:
  - Total BCG expense grew by around forty-three percent over the 2015–17 period.
  - BCG revenue decreased moderately over the 2015–2017 period by around two percent.
  - Net transactions in nonfinancial assets increased by around one-hundred and eighty five percent over the 2015–17 period; investment in fixed assets increased from around 45 Million USD to 128 Million USD between 2015–2017.
  - Transactions in financial assets increased by around 73 percent over the 2015–17 period, driven by significant increase in BCG loans to public sector entities, including ZAMCO.
- Transactions in financial assets (BCG, Billion USD):
  - Financial Assets 2015:
    - Loans 0.20
    - Equity 0.07
    - Currency and Deposits -0.01
    - Net Acquisition Financial Assets 0.26
  - Financial Assets 2016:
    - Loans 0.25
    - Equity 0.07
    - Currency and Deposits 0.01
    - Net Acquisition Financial Assets 0.34
  - Financial Assets 2017:
    - Loans 0.48
    - Equity 0.07
    - Currency and Deposits -0.10
    - Net Acquisition Financial Assets 0.45

### ZAMCO recapitalization and BCG financial assets
- Key criterion: whether the government obtains a financial claim on the entity receiving resources.
- In the ZAMCO case, the government received a financial claim on ZAMCO equal to the value of the resources provided (no change in net worth – see Box 6.3 of GFSM 2014).
- For the years 2015–2017, the government’s financial obligations related to ZAMCO increased by:
  - 246 Million USD in 2015
  - 219 Million USD in 2016
  - 133 Million USD in 2017

### Transactions in liabilities (BCG)
- Transactions in liabilities increased by around two-hundred and eighty percent over the 2015–17 period.
- Drivers of the increase:
  - Issuance of domestic securities increased by 157 percent.
  - Loan contracts increased by 238 percent.
- Breakdown of Transactions in Liabilities (Billion USD):
  - Securities: 0.82 (2015), 1.36 (2016), 2.11 (2017)
  - Loans: 0.21 (2015), 0.75 (2016), 0.71 (2017)
  - Other: 0.05 (2015), 0.01 (2016), 0.00 (2017)
  - Net Incurrence Liabilities: 1.08 (2015), 2.12 (2016), 2.82 (2017)
- Causes: Increases largely due to RBZ and SOE recapitalization along with the clearance of arrears. From the 2019 Public Sector Debt Statistics TA Report: the increase in loan liabilities was largely due to an overdraft with the RBZ and the increase in security issuances was largely due to the clearance of arrears and recapitalization of SOEs.

### Nonautonomous public sector pension schemes (GFSM 2014 treatment)
- GFSM 2014 identifies three types of employment-related pension schemes:
  - A government managed unfunded pension scheme (nonautonomous pension fund)
  - A separate institutional unit that operates a pension scheme (autonomous pension fund)
  - A scheme managed by an insurance enterprise on behalf of the employer (autonomous pension fund)
- Nonautonomous schemes are usually unfunded: benefits are payable from the employer’s general resources.
- Zimbabwe’s six unfunded pension schemes: PSPF, GMBPF, LAPF, NRZPF, UCPF, and ZESAPF; these are managed by MoFED and other relevant Ministries.
- Example (cash-based) assumptions and transactions:
  - Assume central government employee wages and salaries are 100 and employee contributions are 10% (10).
  - Government and Public Sector Employee flows in the example include:
    - Social contributions: 10 (employee) and 10 (recorded under transactions of financial assets for employee)
    - Transactions of financial assets: -90 (government cash) and 90 (employee cash)
    - Transactions in liabilities: 0 (both)
- Ideal GFSM 2014 migration: move towards a ‘modified cash’ basis where:
  - Government would record expense of 90 in wages and salaries (cash) and 10 in pension obligations (IPSGS).
  - Employees would receive 90 in wages and salaries (cash) and 10 in pension claims on government (IPSGS).
- Current treatment in BCG outturn data is suboptimal: pension contributions are recorded on a cash basis with little transparency and no clear identification of pension liabilities or earmarked financial assets.
- Recommendation: move to a modified cash basis of reporting to enable monitoring of performance, sustainability, and solvency of the six nonautonomous pension schemes.

### Extrabudgetary units (EBUs) and local government
- EBUs:
  - EBUs within central government consist of around two-hundred institutional units (higher than the one-hundred and forty-five reported in a 2018 GFS mission).
  - EBUs are dispersed across around twenty-one Ministries; ministries are responsible for collecting financial statistics.
  - At present, consolidated financial statements for EBU funds are not available within MoFED.
  - Authorities transmitted a circular on April 25, 2019 requesting financial statistics for all EBUs; nonreporting ministries would face a stoppage of funding from the AG’s office. A June deadline was set for responses with the intention the AG’s office would provide a dedicated team to compile preliminary statistics over the next twelve months.
- Local government:
  - Local government consists of ninety-two local authorities: five local boards, twelve town councils, eight municipalities, sixty rural district councils, and seven city councils (32 urban and 60 rural).
  - Local governments report financial information to the Ministry of Local Government (MoLG) but not MoFED.
  - Significant lack of data sharing between MoLG and MoFED impedes compilation of GFS using a GFSM 2014 presentation.

### Social security funds and pension schemes
- There are seven pension schemes in the general government, one of which is a social security fund.
- National Social Security Authority (NSSA) is the only scheme meeting the GFSM 2014 definition of a social security fund.
- NSSA produces and publishes financial statements compiled using an IFRS presentation.
- Recommendation: classify NSSA financial statements in a GFSM 2014 presentation to better integrate with general government statistics.

### Recommended actions (summary from mission)
- Compile and publish a complete and accurate list of all general government units, including all local government units and EBUs.
- Expand coverage of GFS to include local authorities, EBUs, and the social security fund; enhance cooperation across ministries to ensure compliance with PFMA and unified transmission of financial statistics to the AG’s office in MoFED.
- Create bridge tables to convert different financial statement presentations into a GFSM 2014 framework; the mission provided training on this exercise.
- Ensure clear recording of subsidies to all SOEs and classify these according to GFSM 2014 guidelines (subsidies in BCG outturn data are broadly classified as capital transfers).
- Ensure clear recording of pension obligations for the six nonautonomous pension schemes and move to a modified cash basis of reporting to enable monitoring of performance, sustainability, and solvency.
- Enhance coordination and cooperation across ministries for sharing financial information for all public sector entities as defined in the PFMA.
- MoFED should formulate and enforce punishment mechanisms for noncompliance with PFMA and PDMA reporting requirements.
- AG’s office should expand compilation of financial statistics to include all EBUs, local authorities, and SOEs using a standardized GFSM 2014 format; short-term conversion of existing data is feasible, medium-term reporting should use GFSM 2014 compatible templates or the new chart of accounts.
- Compile more detailed statistics to reflect all subsidies provided by government to public corporations.
- Authorities should formulate and publish an updated list of all public sector entities; the mission prepared a preliminary list containing 210 EBUs, 92 local authorities, and 105 SOEs (currently being validated).

### Work program and implementation notes (selected)
- Outcome: Institutional sectors defined in accordance with GFSM 2014 guidelines — Target Completion Date June 30, 2018; Actual Completion Date June 1, 2018 — Complete.
- GFS compiled according to GFSM 2014 for budgetary central government — Target Completion Date December 31, 2018 — Complete.
- GFS compiled for general government sector and its subsectors — High risk; Incomplete (as of June 2019).
- CoA codes for revenue and expense transactions consistent with GFSM 2014 — Target Completion Date June 30, 2018; Actual Completion Date June 1, 2018 — Complete.
- Functional classification of expenditure in GFSM 2014 format — Target Completion Date December 31, 2019 — Incomplete (authorities working to meet deadline).
- Classification of stocks of debt follows PSDSG 2011 guidelines — Target Completion Date December 31, 2018 — Complete on a cash basis for securities and loans (including penalties and arrears).
- Design and implement standardized reporting templates for local government units and EBUs compatible with the new CoA and SAP — June 2019 targets — Partially complete; AG’s office provided GFSM 2014 training and requested financial information from EBUs via government circular in June 2019.

### Appendices (selected content inventories)
- Appendix I: Budgetary central government institutional units — list includes Office of the President and Cabinet; Parliament of Zimbabwe; Finance and Economic Development; Health and Child Care; Local Government, public works and national housing; and many other ministries and units.
- Appendix II: Extrabudgetary central government institutional units (preliminary list) — includes African Center for Fertilizer Development; Forestry Commission; Postal and Telecommunication Regulatory Authority of Zimbabwe; Agricultural Research Council (ARC); University of Zimbabwe; National Aids Council of Zimbabwe; NSSA-related and many other funds and entities (preliminary list totals 210 EBUs as noted).
- Appendix III: Local Government Institutional Units — selected urban and rural local authorities that submitted 2016 Debt and Financial Statistics to the MoLG (selected lists provided).
- Appendix IV: Social Insurance Schemes in Zimbabwe — NSSA — Autonomous; PSPF, GMBPF, LAPF, National Railways of Zimbabwe Pension Fund, UCPF, ZESAPF — Nonautonomous.
- Appendix V: Ministry of Finance and Economic Development circular on reporting (Date of circular: 25 April 2019):
  - Purpose: Treasury compiling financial information on extra budgetary funds and SOEs for consolidation to derive the accurate financial position of the entire Government; ensure compliance with PFMA.
  - PFMA verbatim citation: Part IV of the PFMA, section 32: “(1) Every director of finance shall prepare or cause to be prepared the annual [quarterly/monthly] financial statements of the Ministry concerned and shall submit such statements to the Accounting officer of that Ministry and to the Accountant General within thirty days of the year concerned.”
  - Submission requirement: All ministries should submit relevant financial statements and balance sheets, including total gross debt for the Debt Management Office, for all units under their responsibility to the Accountant General (AG) within thirty days of the end of each reporting period.
  - Noncompliance consequence: The Ministry of Finance has the authority to stop funds for public entities not reporting financial information on a regular basis as outlined in the PFMA. Any public entity deemed noncompliant will receive no funding approval from the Ministry of Finance until fully compliant.
  - Requested confirmations and deadline: Ministries asked to confirm the tentative list and provide available financial information; return attached file and information by 30 April.

*International Monetary Fund — Zimbabwe mission report (April 15–26, 2019) — chapter: The Treatment of Nonautonomous Public Sector Pension Schemes in GFSM 2014*

### 1. The Treatment of Nonautonomous Public Sector Pension Schemes in GFSM 2014____________13

### 1. The Treatment of Nonautonomous Public Sector Pension Schemes in GFSM 2014____________13

### Summary of mission outcomes and priority recommendations
- Mission: Harare, Zimbabwe during April 15–26, 2019 under EDDI 2 GFS Module.
- Objectives: review progress and assist with outstanding statistical issues including classification of government subsidies to SOEs; identification and classification of EBUs; correct classification of other government transactions in line with GFSM 2014; classification of government managed (nonautonomous) public sector pension fund transactions.
- Actions taken:
  - Expanded coverage of GFS for EBUs and public corporations; assisted identification of all EBUs and SOEs (preliminary lists transmitted by the Accountant General).
  - Assisted reclassification of Budgetary Central Government (BCG) transactions into GFSM 2014, including bringing some off-balance-sheet financing/recapitalization onto the balance sheet.
  - Assisted correct classification of transactions for government-managed (nonautonomous) public sector pension fund.
- Key findings:
  - Coverage is currently limited to BCG and paints a narrow picture of government financial activities.
  - Progress made but remains slow; long-term goal to compile comprehensive general government GFS given challenges including low adherence to PFMA (2009) and need for greater buy-in from senior officials.
- Priority recommendations (excerpt):
  - Enhance co-ordination and co-operation across ministries to share financial information for all public sector entities as defined in the PFMA.
  - MoFED to formulate and enforce clear punishment mechanisms for non-compliance with PFMA and PDMA (2015).
  - AG’s office to expand compilation of financial statistics to include all extrabudgetary funds, local authorities, and social security funds using a standardized GFSM 2014 format; short term: convert existing data; medium term: require GFSM 2014 compatible reporting.
  - Compile more detailed statistics to reflect all subsidies to public corporations; reclassify capital transfers where appropriate to reveal true subsidy flows.
  - Publish an updated list of all public sector entities including EBUs, local authorities, and SOEs. Mission prepared a preliminary list containing 210 extrabudgetary funds, 92 local authorities, and 105 SOEs (being validated for publication).
- Table 1 — Priority timetable (selected items):
  - September 2019: Complete a comprehensive list of general government units (including EBUs) approved by all ministries. — Responsible: MoFED
  - June 2020: Convert existing EBU financial data into a GFSM 2014 presentation across all ministries. — Responsible: MoFED and other relevant Ministries
  - June 2020: Convert existing local authority financial data into a GFSM2014 presentation for all 92 authorities. — Responsible: MoFED and MoLG
  - September 2020: Move towards full reporting of GFS data (including a financial balance sheet) for all general government subsectors in a GFSM2014 format. — Responsible: MoFED and other relevant Ministries

### Legal framework governing GFS in Zimbabwe
- Primary law: Republic of Zimbabwe Public Finance Management Act (PFMA, 2009). PDMA (2015) also referenced for public debt.
- Findings:
  - PFMA compliance remains largely not met; leads to lack of transparency, accountability, and sound management of public sector finances.
  - AG’s office should set a standardized reporting format across all subsectors; reporting should be timely to MoFED. Ministries should report financial difficulties per PFMA Part V, Section 49 (2).
  - AG currently receives sufficient information only to produce consolidated GFS for BCG. Non-standardized reporting by subsectors (EBUs, local governments, public corporations) hampers consolidation.
  - Public corporations report under IFRS and/or IPSAS, leading to diverse formats and limited usability for MoFED monitoring.
- Recommended action:
  - Review PFMA compliance across all Ministries and enforce requirements; improve cooperation among stakeholders and strengthen enforcement mechanisms.

### General government finance statistics — institutional coverage and procedures
- Institutional coverage:
  - Government has fairly accurate records of institutional units but needs a centralized consistent list, especially for EBUs.
  - The multiplicity and dispersed management of EBUs across ministries is the most significant challenge.
- Mission assistance and administrative measures:
  - Drafted a circular (Appendix V) highlighting PFMA requirements and attached list of 210 EBUs and 105 SOEs compiled during the mission; circular sent to all ministries and stipulates denial of funds to non-reporting entities.
  - AG’s office agreed to hire a team dedicated to compiling standardized financial information for these entities.
- Reporting status:
  - Zimbabwe has only reported GFS for BCG; no data for other subsectors reported to IMF Statistics Department since 2009.
  - Mission produced GFSM 2014 bridge tables using outturn data for 2015–2017 and authorities committed to send this data for publication in the 2019 GFSY.

### GFS for Budgetary Central Government (BCG) in Zimbabwe — overview and reclassifications
- Institutional units:
  - BCG consists of around forty-five institutional units.
  - Six non-autonomous social insurance schemes for public sector employees: Public Sector Pension Fund (PSPF), Grain Marketing Board Pension Fund (GMBPF), Local Authority Pension Fund (LAPF), National Railways of Zimbabwe Pension Fund (NRZPF), Unified Councils Pension Fund (UCPF), Zimbabwe Electricity Supply Authorities Pension Fund (ZESAPF).
- Accounting and classification adjustments made by mission:
  - Capital transfers in Zimbabwe outturn data were reclassified as subsidies where transfers are tied to production/activity levels, consistent with GFSM 2014 guidance; government should provide better breakdowns.
  - Activities of government nonautonomous pension funds reclassified to match cash accounting used in Zimbabwe:
    - Employee pension contributions classified as other social contributions in government revenue and as actual social contributions in government expense.
    - Pension benefit payments recorded as employment-related social benefits.
    - Note: cash-based system does not record pension liabilities; recommendation to move to a modified cash-based system that begins to record obligations below the line.
  - Some below-the-line financing and recapitalization operations previously off-balance-sheet (e.g., RBZ through ZAMCO; transfers to public corporations) were brought onto the BCG balance sheet because government assumed these financial commitments. Result: government liabilities increased and the government deficit increased to account for transfers to public corporations.
- Time series conversion:
  - The mission created GFSM 2014 bridge tables for 2015–2017 and compared GFSM 2014 conversion with MoFED outturn and IMF WEO data (Figures 1–5). For MoFED and author calculations these represent BCG; for WEO estimates these are classified under general government (with metadata).

### Key aggregated statistics and trends (GFSM 2014 conversion, 2015–2017)
- Net lending/net borrowing:
  - Figures show NLB comparisons for 2015–2017 across IMF WEO (April 2019), MoFED outturn, and GFSM 2014 conversion (Figure 1).
- Expenses (BCG, Billion USD):
  - Expense 2015: Total Expense 4.35
    - Compensation of Employees 2.14
    - Subsidies 0.40
    - Use of Goods and Services 0.33
    - Grants 0.62
    - Interest 0.09
    - Social Benefits 0.43
  - Expense 2016: Total Expense 5.19
    - Compensation of Employees 2.28
    - Subsidies 0.75
    - Use of Goods and Services 0.33
    - Grants 0.75
    - Interest 0.14
    - Social Benefits 0.48
  - Expense 2017: Total Expense 6.26
    - Compensation of Employees 2.50
    - Subsidies 1.27
    - Use of Goods and Services 0.83
    - Grants 0.69
    - Interest 0.30
    - Social Benefits 0.52
- Revenue (BCG, Billion USD):
  - Revenue 2015: Total Revenue 3.79
    - Taxes on Goods and Services 1.78
    - Individual Income Tax 0.77
    - Corporate Income Tax 0.42
    - Taxes International Trade 0.34
    - Social Contributions 0.03
  - Revenue 2016: Total Revenue 3.53
    - Taxes on Goods and Services 1.65
    - Individual Income Tax 0.74
    - Corporate Income Tax 0.34
    - Taxes International Trade 0.27
    - Social Contributions 0.14
  - Revenue 2017: Total Revenue 3.81
    - Taxes on Goods and Services 1.80
    - Individual Income Tax 0.73
    - Corporate Income Tax 0.48
    - Taxes International Trade 0.30
    - Social Contributions 0.12
- Notable trends and magnitudes:
  - Total BCG expense grew by around forty-three percent over the 2015–17 period.
  - BCG revenue decreased moderately over the 2015–2017 period by around two percent.
  - Net transactions in nonfinancial assets increased by around one-hundred and eighty five percent over the 2015–17 period; investment in fixed assets increased from around 45 Million USD to 128 Million USD between 2015–2017.
  - Transactions in financial assets increased by around 73 percent over the 2015–17 period, driven by significant increase in BCG loans to public sector entities, including ZAMCO.
- Transactions in financial assets (BCG, Billion USD):
  - Financial Assets 2015:
    - Loans 0.20
    - Equity 0.07
    - Currency and Deposits -0.01
    - Net Acquisition Financial Assets 0.26
  - Financial Assets 2016:
    - Loans 0.25
    - Equity 0.07
    - Currency and Deposits 0.01
    - Net Acquisition Financial Assets 0.34
  - Financial Assets 2017:
    - Loans 0.48
    - Equity 0.07
    - Currency and Deposits -0.10
    - Net Acquisition Financial Assets 0.45

*International Monetary Fund — Zimbabwe mission report (April 15–26, 2019) — chapter: The Treatment of Nonautonomous Public Sector Pension Schemes in GFSM 2014*

### 22.      ZAMCO recapitalization made up a significant part of the increase in BCG net

### ZAMCO recapitalization made up a significant part of the increase in BCG net acquisition of financial assets

### ZAMCO recapitalization and budgetary central government (BCG) financial assets
- The key criterion for treating the ZAMCO recapitalization as a government financial asset is whether the government obtains a financial claim on the entity receiving resources.
- In the ZAMCO case, the government received a financial claim on ZAMCO equal to the value of the resources provided (no change in net worth – see Box 6.3 of GFSM 2014).
- For the years 2015–2017, the government’s financial obligations related to ZAMCO increased by:
  - 246 Million USD in 2015
  - 219 Million USD in 2016
  - 133 Million USD in 2017

### Transactions in liabilities (BCG)
- Transactions in liabilities increased by around two-hundred and eighty percent over the 2015–17 period.
- Drivers of the increase:
  - Issuance of domestic securities increased by 157 percent.
  - Loan contracts increased by 238 percent.
- Breakdown of Transactions in Liabilities (Billion USD):
  - Securities: 0.82 (2015), 1.36 (2016), 2.11 (2017)
  - Loans: 0.21 (2015), 0.75 (2016), 0.71 (2017)
  - Other: 0.05 (2015), 0.01 (2016), 0.00 (2017)
  - Net Incurrence Liabilities: 1.08 (2015), 2.12 (2016), 2.82 (2017)
- These increases were largely due to RBZ and SOE recapitalization along with the clearance of arrears.
- From the 2019 Public Sector Debt Statistics TA Report: the increase in loan liabilities was largely due to an overdraft with the RBZ and the increase in security issuances was largely due to the clearance of arrears and recapitalization of SOEs.

### Nonautonomous public sector pension schemes (GFSM 2014 treatment) — Box 1
- GFSM 2014 identifies three types of employment-related pension schemes:
  - A government managed unfunded pension scheme (nonautonomous pension fund)
  - A separate institutional unit that operates a pension scheme (autonomous pension fund)
  - A scheme managed by an insurance enterprise on behalf of the employer (autonomous pension fund)
- Nonautonomous schemes are usually unfunded: benefits are payable from the employer’s general resources.
- Zimbabwe’s six unfunded pension schemes: PSPF, GMBPF, LAPF, NRZPF, UCPF, and ZESAPF; these are managed by MoFED and other relevant Ministries.
- Example (cash-based) assumptions and transactions:
  - Assume central government employee wages and salaries are 100 and employee contributions are 10% (10).
  - Government and Public Sector Employee flows in the example include:
    - Social contributions: 10 (employee) and 10 (recorded under transactions of financial assets for employee)
    - Transactions of financial assets: -90 (government cash) and 90 (employee cash)
    - Transactions in liabilities: 0 (both)
- Ideal GFSM 2014 migration: move towards a ‘modified cash’ basis where:
  - Government would record expense of 90 in wages and salaries (cash) and 10 in pension obligations (IPSGS).
  - Employees would receive 90 in wages and salaries (cash) and 10 in pension claims on government (IPSGS).
- Current treatment in BCG outturn data is suboptimal: pension contributions are recorded on a cash basis with little transparency and no clear identification of pension liabilities or earmarked financial assets.

### Extrabudgetary units (EBUs)
- The EBUs within central government consist of around two-hundred institutional units (higher than the one-hundred and forty-five reported in a 2018 GFS mission).
- EBUs are dispersed across around twenty-one Ministries; ministries are responsible for collecting financial statistics.
- At present, consolidated financial statements for EBU funds are not available within MoFED.
- Authorities transmitted a circular on April 25, 2019 requesting financial statistics for all EBUs; nonreporting ministries would face a stoppage of funding from the AG’s office. A June deadline was set for responses with the intention the AG’s office would provide a dedicated team to compile preliminary statistics over the next twelve months.

### Local government
- Local government consists of ninety-two local authorities: five local boards, twelve town councils, eight municipalities, sixty rural district councils, and seven city councils (32 urban and 60 rural).
- Local governments report financial information to the Ministry of Local Government (MoLG) but not MoFED.
- Significant lack of data sharing between MoLG and MoFED impedes compilation of GFS using a GFSM 2014 presentation.

### Social security funds and pension schemes
- There are seven pension schemes in the general government, one of which is a social security fund.
- National Social Security Authority (NSSA) is the only scheme meeting the GFSM 2014 definition of a social security fund.
- NSSA produces and publishes financial statements compiled using an IFRS presentation.
- Recommendation: classify NSSA financial statements in a GFSM 2014 presentation to better integrate with general government statistics.

### Recommended actions (summary from mission)
- Compile and publish a complete and accurate list of all general government units, including all local government units and EBUs.
- Expand coverage of GFS to include local authorities, EBUs, and the social security fund; enhance cooperation across ministries to ensure compliance with PFMA and unified transmission of financial statistics to the AG’s office in MoFED.
- Create bridge tables to convert different financial statement presentations into a GFSM 2014 framework; the mission provided training on this exercise.
- Ensure clear recording of subsidies to all SOEs and classify these according to GFSM 2014 guidelines (subsidies in BCG outturn data are broadly classified as capital transfers).
- Ensure clear recording of pension obligations for the six nonautonomous pension schemes and move to a modified cash basis of reporting to enable monitoring of performance, sustainability, and solvency.
- Enhance coordination and cooperation across ministries for sharing financial information for all public sector entities as defined in the PFMA.
- MoFED should formulate and enforce punishment mechanisms for noncompliance with PFMA and PDMA reporting requirements.
- AG’s office should expand compilation of financial statistics to include all EBUs, local authorities, and SOEs using a standardized GFSM 2014 format; short-term conversion of existing data is feasible, medium-term reporting should use GFSM 2014 compatible templates or the new chart of accounts.
- Compile more detailed statistics to reflect all subsidies provided by government to public corporations.
- Authorities should formulate and publish an updated list of all public sector entities; the mission prepared a preliminary list containing 210 EBUs, 92 local authorities, and 105 SOEs (currently being validated).

### Work program and implementation notes (selected)
- Outcome: Institutional sectors defined in accordance with GFSM 2014 guidelines — Target Completion Date June 30, 2018; Actual Completion Date June 1, 2018 — Complete.
- GFS compiled according to GFSM 2014 for budgetary central government — Target Completion Date December 31, 2018 — Complete.
- GFS compiled for general government sector and its subsectors — High risk; Incomplete (as of June 2019).
- CoA codes for revenue and expense transactions consistent with GFSM 2014 — Target Completion Date June 30, 2018; Actual Completion Date June 1, 2018 — Complete.
- Functional classification of expenditure in GFSM 2014 format — Target Completion Date December 31, 2019 — Incomplete (authorities working to meet deadline).
- Classification of stocks of debt follows PSDSG 2011 guidelines — Target Completion Date December 31, 2018 — Complete on a cash basis for securities and loans (including penalties and arrears).
- Design and implement standardized reporting templates for local government units and EBUs compatible with the new CoA and SAP — June 2019 targets — Partially complete; AG’s office provided GFSM 2014 training and requested financial information from EBUs via government circular in June 2019.

*Source: INTERNATIONAL MONETARY FUND — Excerpt from the Zimbabwe GFS/PSDSG report content provided.*

### Appendix I. Budgetary Central Government Institutional Units

### Appendix I. Budgetary Central Government Institutional Units

### Budgetary central government institutional units (listed)
- Ministry of Sports and Recreation
- Agriculture mechanization and irrigation development
- National Peace and Reconciliation Commission
- Anti-corruption Commission
- National Prosecuting Authority
- Audit Office
- Office of the President and Cabinet
- Council of Chiefs
- Parliament of Zimbabwe
- Energy and Power Development Parliamentary Select Committee
- Finance and Economic Development
- Primary and secondary education
- Foreign Affairs
- Public Service Commission
- Health and Child Care
- Public service Labor and Social welfare
- Higher and Tertiary Education, Science and Technology Development
- Rural Development and Preservation of National Cultural Heritage
- Home Affairs
- Tourism and Hospitality Industry
- Hospitals
- Transport and Infrastructural Development
- Human Rights Commission
- URBAN DEVELOPMENT CORPORATION (UDCORP)
- Industry and Commerce
- Water and climate
- Information communication technology postal and curial services
- Welfare Services for war Veterans, War collaborators, former Political Detainees and Restrictees
- Judicial Services Commission
- Women’s affairs, gender and community development
- Justice Legal and parliamentary Affairs
- Youth Indigenization and economic empowerment
- Lands and Rural Development
- Zimbabwe Anticorruption Commission
- Local Government, public works and national housing
- Zimbabwe Electoral Commission
- Macroeconomic Planning
- Zimbabwe Gender Commission
- Media and Information Commission
- Zimbabwe Land Commission
- Media, Information and broadcasting services
- Zimbabwe Media Commission
- Mines and Mining Development
- National Peace and Reconciliation Commission
- Ministry of Small and Medium Enterprises and Cooperative Development
- National Prosecuting Authority
- National Library and Documentation Services
- Office of the President and Cabinet

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### Appendix II. Extrabudgetary Central Government Institutional Units

### Extrabudgetary central government institutional units (preliminary list)
- African Center for Fertilizer Development
- Forestry Commission
- Company Medicine Control Authority of Zimbabwe
- Postal and Telecommunication Regulatory Authority of Zimbabwe
- Training Loan Fund
- Agricultural Research Council (ARC)
- Freedom from Hunger Campaign
- Meteorological Services Fund
- Procurement Regulatory Agency
- Transport Purchase Fund
- Agriculture Marketing Authority (AMA)
- Gold Development Initiative Fund
- Midland State University
- Public Service Training Centers and Amenities Fund
- United Bulawayo Hospitals
- Agriculture Revolving Fund
- Government Pool Property Fund
- Mines and Mining Development Fund
- Public Service Transport Management Fund
- Universal Services Fund
- Allied Health Practitioners Council
- Great Zimbabwe University
- Mining Industry Loan Fund
- Quantity Survey Council
- University of Zimbabwe
- Architectural Council
- Guardian Fund
- Mpilo Hospital
- Radiation Protection Authority
- Valuers Council
- Attorney General's Office Administration Fund
- Gwanda State University
- National Aids Council of Zimbabwe
- Registrar General Retention Fund
- Vocational and Technical Examinations Fund
- Aviation Infrastructure Development Fund
- Harare Central Hospital
- National Archives of Zimbabwe
- Research Council of Zimbabwe
- Water Fund
- Bindura University of Science Education
- Harare Institute of Technology
- National Archives Retention Fund
- Rhodes Matopos Fund
- Welfare and Benevolent Fund
- Bio Safety Board
- Harare/Masvingo Beitbridge
- National Arts Council of Zimbabwe
- Rhodes Nyanga Fund
- Women’s Development Fund
- Board of Censors
- Health Professions Council/Authority
- National Biotechnology Authority
- Roads Fund Youth Development Fund
- Broadcasting Authority of Zimbabwe
- Health Service Board
- National Blood Transfusion Services
- Rural Electrification Authority
- Zimbabwe Anti-Corruption Commission
- Broadcasting Fund
- Health services fund
- National Coordinating Unit
- Rural Housing Fund
- Zimbabwe Association of Church Related Hospitals
- Bulawayo/Harare School of Hospitality and Tourism
- Health Services Fund
- National Economic Consultative Forum
- Salary Services Bureau Fund
- Zimbabwe Community Development Fund
- Catchment councils
- Housing and Guarantee Fund
- National Economic Inspectorate Conduct
- School Services Fund
- Zimbabwe Council for Higher Education
- Central Cooperation Fund
- Immigration Services Fund
- National Education and Training Fund
- Schools and Committees Fund
- Zimbabwe Economic Policy and Research Unit
- Central Vehicle Registry immigration Services Fund
- National Gallery of Zimbabwe
- Schools Development Fund
- Zimbabwe Electoral Commission
- Chinhoyi University of Technology
- Independent College Guarantee Fund
- National Heroes Dependents Assistance Fund
- Scientific & Industrial Research Development Centre (SIRDC)
- Zimbabwe Energy Regulatory Authority
- Chitungwiza Hospital
- Indo-Zimbabwean Fund
- National Housing Fund
- Scientific and Industrial Research cooperation
- Zimbabwe Film and Training School
- Civil Protection Fund
- Industrial Training and Trade Testing Fund
- National Housing Fund
- Securities and Exchange Commission
- Zimbabwe Institute of Legal Studies
- Civil Service Housing Fund
- Industry and Trade Competition Commission
- National Housing Guarantee Fund
- Senior Officers Housing Fund
- Zimbabwe Institute of Public Administration and Management
- Colleges Amenities Fund
- Industry Training and Trade Testing Fund
- National Income and Pricing Commission
- Small and Medium Enterprise Revolving Fund
- Zimbabwe Investment Authority
- Competition and Tariff Commission
- Ingutsheni Central Hospital
- National Indigenization and Economic Empowerment Social Amenities Fund
- Zimbabwe Manpower Development Fund
- Consumer Council of Zimbabwe
- Innovation and Commercialization Fund
- National Investment Trust
- Sovereign Wealth Fund
- Zimbabwe Media Commission
- Council of Legal Education
- Institute of Mining Research
- National Library and Documentation Service
- Special Gold Unit Fund
- Zimbabwe National Boxing Control Board
- Courts and Administration Fund
- Insurance and Pension Commission
- National Museums and Monuments of Zimbabwe
- Special Services
- Zimbabwe National Family Planning Council
- Debt Redemption Fund
- Japanese Economic and Social Development Fund
- National Parks and Wildlife Management Authority
- Sports and Recreation Commission
- Zimbabwe National Wrestling Control Board
- Deeds and Companies Office Fund
- Judicial College
- National University of Science and Technology
- Stadia Revolving Fund
- Zimbabwe Nurses Association
- Deeds, Companies and Intellectual Property Fund
- Judicial Service Commission
- National Youth Council
- Standard Development Fund
- Zimbabwe Olympic Committee
- Defense Procurement Fund
- Lands and Resettlement Fund
- National Youth Development and Employment Creation Fund
- Standards Association
- Zimbabwe Open University
- Department of Roads fund
- Lands Compensation Fund
- National Youth Service
- Standards Development Fund
- Zimbabwe Prisons and Correctional Services Fund
- Department of Roads fund
- Law Development Commission
- New Limpopo Bridge Fund
- State Enterprise Restructuring Agency
- Zimbabwe Revenue Authority (ZIMRA)
- District Development Fund
- Legal Aid Directorate
- New Number Plate Fund
- State Lotteries and Gaming Board
- Zimbabwe School Examination Council
- Drug Information and Poisons Advice Centre
- Liquor Licensing Board
- New Vehicle Security Registration Number Plate Revolving Fund
- State Procurement Board
- Zimbabwe School of Mines
- Education Materials Disbursement Fund
- Lupane State University
- Pan African Minerals University of Science Technology
- Strategic Reserves Fund
- Zimbabwe Tourism Authority
- Employment Creation Fund
- Manicaland State University of Applied Sciences
- Parirenyatwa group of Hospitals
- Technology Information pilot System
- Zimbabwe Tourism Fund
- Engineering Council
- Marondera University of Agricultural Sciences and Technology
- Pension Office Retention Fund
- Tertiary Education and Training Fund
- Zimhabitat
- Environment Management Agency
- Mashonaland University
- Pharmacist Council of Zimbabwe
- Tobacco Research Board
- ZIMSTAT
- Environmental Health Practitioners Council of Zimbabwe
- Masvingo State University
- Pig Industry Board
- Trade Measures Fund
- ZIMTRADE
- Farmer Development Trust
- Medical Laboratory and Clinical Scientists Council of Zimbabwe
- Pipeline and Rail Fund
- Traditional Healers Councils
- ZPS Revolving/Retention Fund
- Food and Nutrition Council
- Medical Rehabilitation Practitioners Council
- Police Procurement Fund
- Traffic and Legislation Fund
- Food Standards Advisory Board
- Medical School Travel Grant
- Political Parties Fund
- Traffic Safety Council of Zimbabwe
- Extrabudgetary Funds (Preliminary List)

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### Appendix III. Local Government Institutional Units

### Local authorities that submitted 2016 Debt and Financial Statistics to the MoLG
Urban Local Authorities (selected list)
- Chinhoyi Municipality
- City of Kadoma
- Norton Town
- Kariba Municipality
- Karoi Town
- Chegutu Municipality
- City of Bulawayo
- Chirundu Local Board
- Gwanda Town
- Plumtree Town
- Chitungwiza Town
- Beit Bridge Town
- Chiredzi Town
- Zvataida
- Masvingo City
- Ruwa Local Board
- Bindura Urban
- Mvurwi
- Marondera Municipality
- Rusape Town Council
- Epworth Local Board
- Hwange Local Board
- Lupane Local Board
- Victoria Falls Municipality
- Harare city
- Redcliff
- Gweru
- Kwekwe city
- Mutare city
- Zvishavane town
- Gokwe town
- Shurugwi town

Rural Local Authorities (selected list)
- Chegutu RDC Chaminuka
- Hurungwe RDC Bindura RDC
- Mhondoro Ngezi RDC Guruve
- Nyaminyami RDC Pfura
- Makonde RDC Muzarabani
- Zvimba RDC Rushinga
- Sanyati RDC Chipinge RDC
- Nyanga RDC Chikomba RDC
- Umzingwane RDC Wedza RDC
- Matobo RDC Murewa RDC
- Mangwe RDC Manyame RDC
- Bulilima RDC Mutoko RDC
- Beit bridge RDC Uzumba Maramba Pfungwe
- Insiza RDC Mudzi RDC
- Gwanda RDC Goromonzi RDC
- Buhera RDC Marondera RDC
- Bikita Rural Makoni RDC
- Chivi RDC Binga RDC
- Zaka RDC Hwange RDC
- Gutu RDC Tsholotsho RDC
- Masvingo Rural Bubi RDC
- Mwenezi Nkayi RDC
- Mazowe Kusile RDC
- Mbire Gokwe south RDC
- Chirumanzu RDC Mutare RDC
- Runde RDC Tongogara RDC
- Gokwe north Vhunga RDC
- Zibagwe

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### Appendix IV. Social Insurance Schemes in Zimbabwe

### Social insurance schemes and autonomy status
- National Social Security Authority (NSSA) — Autonomous
- Public Sector Pension Fund (PSPF) — Nonautonomous
- Grain Marketing Board Pension Fund (GMBPF) — Nonautonomous
- Local Authority Pension Fund (LAPF) — Nonautonomous
- National Railways of Zimbabwe Pension Fund — Nonautonomous
- Unified Councils Pension Fund (UCPF) — Nonautonomous
- Zimbabwe Electricity Supply Authorities Pension Fund — Nonautonomous

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### Appendix V. Ministry of Finance and Economic Development Circular on Reporting of Extrabudgetary Fund and State-Owned Enterprise Financial Statistics

### Purpose and requirements
- Treasury is compiling financial information on extra budgetary funds and state-owned enterprises (SOEs) for consolidation to derive the accurate financial position of the entire Government.
- The exercise partly ensures compliance with the Public Finance Management Act (PFMA).
- PFMA citation included verbatim: Part IV of the PFMA, section 32: “(1) Every director of finance shall prepare or cause to be prepared the annual [quarterly/monthly] financial statements of the Ministry concerned and shall submit such statements to the Accounting officer of that Ministry and to the Accountant General within thirty days of the year concerned.”
- All ministries should submit relevant financial statements and balance sheets, including total gross debt for the Debt Management Office, for all units under their responsibility to the Accountant General (AG) within thirty days of the end of each reporting period.
- The information should cover all public entities including budgetary, extra budgetary, and social security funds, along with all local authorities across all ministries.
- PFMA subsection cited verbatim: Subsection (2) of Section 36: “The Accountant General may determine: a) the format of the statement of revenue and expenditure and the annual report; and b) any other details that the financial statement may contain.”

### Compliance, format, and enforcement
- Noncompliance consequence: The Ministry of Finance has the authority to stop funds for public entities not reporting financial information on a regular basis as outlined in the PFMA. Any public entity deemed noncompliant will receive no funding approval from the Ministry of Finance until fully compliant.
- Financial statements should be submitted as they are being compiled.
- Financial statements will be expected to be submitted in the new GFSM 2014 format once ministry training has been completed.

### Requested information and deadline
- Ministries were asked to confirm for units listed by the Accountant General’s office:
  - Whether the tentative list is correct (identify missing units or units that no longer exist).
  - The financial information available for these units, including financial statement and balance sheet, indicating which years and on what reporting basis (monthly/quarterly/ annual).
  - Whether this financial information is being sent to relevant officers in the AG's office.
- Return instruction: Please return the attached file along with any other relevant information for your ministry by 30 April.

*Source: Appendix I–V and Ministry of Finance and Economic Development circular (25 April 2019) from the supplied IMF PDF content.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1zweea2020002.pdf_