‘Empty’ 2020 Budget Passes
Parliament this week approved the 2020 National Budget before adjourning.
Finance Minister Bwalya Ng’andu sought support for the K106 billon budget, claiming it would deliver economic turnaround despite the challenges.
The budget targets the agriculture, tourism, mining, energy and manufacturing sectors to drive growth. It also sees Government abandon the sales tax and reform VAT.
However, opposition MP Douglas Syakalima has warned that the budget is almost empty as a result of the sharp depreciation of the kwacha against the US dollar and inflation. The currency has dropped 21 per cent in 2019, making it the world’s third-worst performing currency this year.
“Everything that we’ve budgeted for, Minister of Finance, will not be realised next year,” Syakalima warned. He also predicted growth of less than two per cent in 2019.
He called on the Minister of Finance to not give Zambians empty promises.
“At the level of inflation that we have today, you have nothing in your budget. You have no budget! Minister of Finance, you have to own up that your government is broke. It is broke, and broke indeed!”
The Zambia Institute for Policy Analysis and Research (ZIPAR) has welcomed the budget, which it says could stimulate the domestic economy. However, it warned that “planting and nurturing seeds for growth in 2020 and beyond will not be easy in view of the anticipated difficult macroeconomic conditions, challenging fiscal and debt expansions, adverse climate change effects and urgent social sector demands.”
The group further caution that additional debt expansion will need to be managed. The 2020 budget is an increase of 22 per cent and is likely to required K31 billion in additional loans.
“With the lax fiscal consolidation displayed in the 2020 budget, it casts doubts on the likelihood of an IMF programme in the immediate future. More innovative options to constrain servicing costs need to be explored, such as: bond buy-backs; strengthening Ministry officials’ capacities in debt management; innovative term financing of infrastructure; the use of Public-Private Partnerships; issuance of Infrastructure Bonds targeting retail investors; and the financing of infrastructure using proceeds from road tolls,” ZIPAR has stated.
Meanwhile, the President of the Civil Servants and Allied Workers Union of Zambia Davy Chiyobe has requested Government pay civil servants their outstanding salaries before Christmas. Chiyobe noted that there are some civil servants with salaries still owed from previous months and the remains uncertainty with regards to pay dates.
Before adjourning sine die Parliament passed seven other bills including the Supplementary Appropriation Bill (2019) and the Electricity and Energy Regulation Bills, as well as the Property Transfer tax, Value Added Tax, Income Tax, and Customs and Excise Amendment Bills.
