Finance Minister Alexander Chikwanda has for the first time admitted that the PF government has a deficit on its 2013 national budget.
Without specifying the actual value of the deficit, Mr. Chikwanda told a media briefing Sunday morning that the deficit was as a result of unbudgeted expenditure.
Several stakeholders have been arguing that Zambia was in a budget deficit situation with some claiming that the budget role runs in the region of K5 billion.
“Yes there is a budget deficit but deficits are normal. It happens everywhere and there is nothing strange about it but what it is important is the measures that the treasury will devise to cut the deficit,” Mr Chikwanda said.
He attributed the deficit to a multiplicity of factors such as the huge expenditure on maize purchases by the Food Reserve Agency and the oil import bill before the subsidies on fuel were removed.
“The huge increment in public service wages which comes into effect in September has also contributed,” said Mr Chikwanda.
“The global economic situation has not been very favourable, this has posed a challenge to us on the revenue side. Our projections have not matched our financing requirements.”
Mr. Chikwanda however vehemently denied that the cost of financing bye elections has contributed to the fiscal challenges.
“Bye elections are budgeted for and they are constitutional. We have not over spent on bye elections.”
He added that government will keep a tight grip on borrowing despite the budget deficit.
“We don’t want to over burden the future generations with unsustainable debt levels. Our debt to GDP ratio stands at around 5 percent so will don’t want to increase that further, we will only go to the bond market at an appropriate time.”
Mr. Chikwanda also revealed that he will soon be tabling the Medium Term Expenditure Framework in Parliament which will spell out details on how government will respond to the fiscal challenges in the short to medium term.