Government has unveiled a K 16.7 trillion (about US$3.55 billion) budget for the year 2010 as compared to the approved budget of K 15.27 trillion for this year.
Presenting the budget to parliament today, Minister of Finance and National Planning, Situmbeko Musokotwane disclosed that government would constrain lower priority expenditures but direct more resources to programmes aimed at stimulating growth and diversifying the economy.
Dr. Musokotwane said government’s economic agenda for 2010 and beyond would be to overcome the current recession and restore growth back to the pre-global economic crisis trend levels.
He said macroeconomic policies will in 2010 continue to focus on consolidating the recovery of the domestic economic base and protecting key social expenditures in the education and health sectors.
“This will be done by continuing with our economic diversification programme, thereby laying a solid foundation for higher sustainable growth and building resilience to external shocks,” he said.
He said out of the K16.7 trillion 2010 national budget, K12.1 trillion will be raised through domestic revenue collection, representing 72.4 per cent of the budget.
He added that K2.42 trillion, which is 14.5 per cent of the national budget, would be raised from grants from Zambia’s cooperating partners while the balance of K2.18 trillion or 13.1 per cent will be financed through domestic borrowing.
Government will borrow K1.48 trillion from domestic sources and K697.1 billion from foreign financial institutions.
Dr. Musokotwane told parliament that the general public services will consume the largest share of the 2010 national budget at 32.1 per cent.
“This is slightly higher than the 31.8 per cent share in 2009, as a result of the need to finance certain key expenditures such as voter and national registration at a cost of K 128.5 billion, the national census at a cost of K97.6 billion, and the constitution making process at K50 billion,” he explained.
He added that these programmes will collectively consume 1.7 per cent of the 2010 budget.
The presentation of national budget in advance of the financial year follows a change in the budget cycle after a constitutional amendment.
This will ensure that the budget is implemented over a full one year as opposed to previous years when the budget for a particular year was presented in March of the financial year.
And Dr. Musokotwane has proposed that the Pay As You Earn (PAYE) threshold should increase from K700,000 to K800,000 per month while the tax bands have remained unchanged.
“This means that those earning below K 800, 000 per month will be exempt from this tax. This measure will return K 85.0 billion to pockets of our workers,” he said.
He said the tax credit to the differently-abled persons has been increased from this year’s K 900, 000 to K1, 560,000 per annum, adding that this will result in minimum revenue loss.
These measures will be effected in April 2010.
Meanwhile, Dr. Musokotwane has expressed optimism that Zambia’s economic growth for this year has been projected at 4.3 per cent, which is a downward revision from the 5 per cent he announced in his 2009 budget address.
He said although the country suffered adverse effects of the 2008/2009 global economic crisis, the country will achieve and exceed the 5 per cent economic growth if the economic conditions continue to improve in the final quarter of 2009.
The minister said government’s macroeconomic objectives in 2010 are to exceed 5 per cent economic growth and reduce end-year inflation to 8 per cent.
He said government will limit domestic borrowing to 2.0 per cent.
Dr. Musokotwane has since called on Zambians to continue working hard in order to economically prosper the country.
“It is imperative that we do not lose the ground that we have gained. It is therefore essential that we continue to pursue business friendly macroeconomic policies in order to strengthen and sustain the investor confidence needed for economic growth and job creation,” he stressed.
ZANIS
Apart from the budget being presented and documented with technical jargon another similar copy of the budget should be presented and documented in a lay man’s simple language, something that is simple ,can easily be understood. and broken down line by line There should also be an evaluation of the 2009 budget in simple lay man’s language to help the general tax payer understand how their money was spent.This should also be broken down line by line.
Economic diversification is a good thing for Zambia but it has to be done more efficiently. Successful diversification is measured by the development of the local industry, so we should be able to see some quality Zambian products and services to know that things are moving well.
A few good indications. Overall, we could do far much better. PAYE threshold is still too low. Zambians are the poorest and earn the least on the global benchmark but are the most taxed, if you look at it comensurately. This gvt is spending too much, our debt has mounted since RB came in power. At the 4.3% growth, it will take Zambia about 90 years to absorb the jobseekers into the market, which is in the end unattainable regarding how unpredictable this capitalist global economy is. We can do much better. HHs economic policy potentially can grow our economy at +10% per year. Zambians wake up. We are going nowhere with these punks.
Ba number 3 naimwe, HH sure? Or did you mean a growth rate of negative 10% per year under baby Sata?
56.3380282% of that Budget is what the citizens of Ghana living in the diaspora pump back into their native economy every year as of lastt year and before. That is $2 billion. Oh! well we shall some how some way get there too.
Seriously $4 Billion is a joke – what can you do with that money when you do not have any infrastructure at all? Mother Zambia! That money is not even enough to straighten Lusaka.
Most of what we have done over the past few years are just cosmetic changes that will not have a sustained impact of our economic growth and welfare of the average Zambian. What we really need is a complete overhaul of our approach to creating wealth for the nation. We can only increase our national budget and funding to health and education is if the economy from which we get tax grows. The growth of the economy should be entirely driven by the private sector and not the 2nd republic argument that government is the provider and profit seeking is inherently evil. Lets allow the private sector to flourish.
Diversification – Some one once explained to me that it is best to concentrate on what you are good at first. As your good sector grows and improves so will its supporting industries. Its a sort of trickle-down effect. But first you need to exploit your unique competences and resources. For Zambia I believe that would be mining. It should be in less foreign hands and should be subject to higher taxes and stricter controls. Just an opinion.
Natalie number 4, let us engage in a constructive and mature conversation. Surely any body with a strong analytical brain which focuses on real issues, not tissues can see that HH is a credible leader. Uli chikopo nangu shani? Watch his debates on you tube, listen to his ideas and compare them to your other leaders. Perhaps you dont even know him personally and dont know his achievements. Kwata amano. Problem is pa Zed ubufontini, we dont focus on real; issues and tend to talk about nonsense like him being a tonga or like your baby sata rubbish. U sureky need more tutelage.
“Government will borrow K697.1 billion from foreign financial institutions” This is £100 million pounds! Why do we have to borrow this money? Is it really necessary? It seems to me that this money is borrowed not for investment to grow our economy but to pay for the tax threshold that has been raised. Zambians will not pay tax on £100 per month. This works out to just more than £1000 per year. If there are 150,000 taxed employees in Zambia, it means just more than £150 million per year is lost to the government. So he has borrowed £100 million to finance tax relief? Why doesn’t the govt broaden the tax base? Surely, there are more than 400,000 Zambians who should pay tax? Otherwise scrap PAYE altogether!
Zambian Treasury is let down and must be scrapped: the 2030 Vision will remain a dream and unattainable. It was supposed to unveil US$ 30 – 50 billion budget that can move the country forward. Zambian economy requires a huge injection of capital resources, and the government has a big role to play and not being a spectator. RSA economy is 80 times that of Zambia and Sweden is 16 times that of RSA; mean that Zambia is almost 1300 times less developed than Sweden. While Namibia with 1.6m people also had 2009 budget of US$3.6 billion, Zambian Finance must be a day dreamer?
The world economy is mired in the most severe financial crisis since the “great depression” and early responses from developed nations have failed to prevent the crisis. In view of prevailing darker economic scenario, the Zambia Budget 2010 may have a good impact on the macro economic growth. However more spending is required for health and education.
This post couldnt be more on the money.