2021 Budget Consultations Begin

The Ministry of Finance is undertaking consultations in relation to the 2021 National Budget, as well as the 2021-2023 Medium Term Expenditure Framework. In addition, the Ministry is revising the 2020 budget in the wake of Covid-19. 

The K106 billion budget for 2020 was approved by Parliament in December 2019 and targets the agriculture, tourism, mining, energy and manufacturing sectors to drive growth. It also saw Government abandon the sales tax and reform VAT. 

Recent budgets have become a focus point for opposition and civil society, with some objecting to the Government’s continued borrowing. The 2020 budget represented a 22% increase on 2019, prompting concern that K31 billion in new loans would be contracted to address the projected shortfall.

Finance Minister Bwalya Ngandu has since indicated that estimated revenue for 2020 is predicted to fall by at least 20%, or K14.8 billion, as a result of Covid-19.

In line with the consultations the Ministry has appealed to citizens and stakeholders to share proposals with Government. The Tax Policy Review Committee is also expected to undertake country-wide engagements across all provinces to encourage participation.

The consultation period is expected to end on 31st July 2020.

In light of the current global pandemic the International Monetary Fund (IMF) has forecast a 3.5% contraction of the economy. Power shortages were identified as another contributing factor to the bleak projection. 

Relations with the IMF have proved trouble under President Lungu’s government. A bailout had been under discussion, on and off, for more than five years, with the Government rejecting an initial proposal in 2015, before returning to the negotiating table. The President then challenged the IMF to leave the country if they felt he had gone beyond the norms of good governance and democracy following the declaration of a state of emergency in 2017. The fund subsequently withdrew its representative to Zambia in August 2018. The major stumbling block to a deal appears to be concerns regarding Zambia’s debt sustainability. External debt stock continues to rise and now stands at US$11.2 billion.