An Investigation into the Effect of Budget Deficit on the Economic Performance of Zimbabwe

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.