Government Needs To Boost Tax Revenues - Finance Ministry

The finance ministry has issued a warning saying that the government urgently needs to increase its tax collection as the country’s fiscal deficit remains incredibly high. 

According to treasury secretary Fredson Yamba, the government must come up with a medium-term policy that will put the country back on a path towards fiscal consolidation. Mr Yamba’s statement comes as the government continues its talks with the International Monetary Fund (IMF), in the hopes of securing a debt relief deal before elections on August 12.

Zambia’s debt situation has spiralled out of control in recent years, with the country becoming the first African nation to default on its debts in the pandemic-era after it missed a Eurobond coupon payment in November 2020. 

Zambia’s government debt currently stands at over $12 billion - a dramatic rise from the $1.9 billion owed by the country when the Patriotic Front (PF) first took power in 2011. 

The government has said it aims to reduce the country’s fiscal deficit to 9.3% of gross domestic product this year - down from the 11.7% projected in 2020.

In line with this, the government reduced spending in the first quarter of 2021 by 23%, according to Finance Minister Bwalya Ng’andu.

However, this is still not enough to placate Zambia’s international lenders, who want to see a greater degree of transparency and accountability from the government about how it spends its money.

While the IMF says it is still ‘possible’ for the country to do a deal before parliament is dissolved in May, creditors are less optimistic. In particular they are concerned about an estimated $3 billion debt to China and Chinese state entities, which the government has been unwilling to disclose the details of.