Friday, March 29, 2024

Bank of Zambia and Ministry of Finance are in talks on revision of the 2015 national budget

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Denny Kalyalya
Denny Kalyalya

THE BANK of Zambia (BoZ) and Ministry of Finance are in talks on the possible revision of the 2015 national budget due to the misaligned fiscal position.

The overall balance of payments (BoP) deficit has also widened to US$405.2 million from US$131.9 million recorded during the fourth quarter of 2014, largely on account of unfavourable performance in both the current and financial accounts.

BoZ governor Denny Kalyalya told a press briefing yesterday that it is important to make adjustments to the budget because the fiscal position is misaligned as demonstrated by the low revenue.

“To complement monetary policy, further fiscal adjustments are required to address revenue shortfalls and rationalise expenditure so as to achieve fiscal stability,” Dr Kalyalya said.

Preliminary data indicates that a budget deficit of 1.5 percent of gross domestic product (GDP) was recorded during the first quarter mainly due to lower than programmed revenues.

Dr Kalyalya explained that the total revenue and grants were 3.0 percent lower than programmed as a result of lower non-tax revenues attributed to weak performance in mineral royalty revenues and the non-receipt of grants.

“Lower than programmed revenue is putting immense pressure on the financing requirements for the budget from the domestic market, which is causing yield rates on Government securities and other interest rates to rise.

“On the other hand, total expenditure was 4.0 percent lower than the programmed amount,” Dr Kalyalya said.

He said failure to adjust the budget will have a negative impact on the economy, citing pressure on domestic financing as one of the challenges.

On the BoP deficit, Dr Kalyalya said unfavourable performance in the current and financial accounts contributed to the deficit.

The current account deficit widened to US$223.3 million from US$179.6 million recorded the previous quarter, driven by a decline in the surplus on the balance on goods and lower secondary income inflows.

“The surplus on the balance on goods was 56.9 percent lower than the preceding quarter, explained by a higher decline in goods exports relative to imports. Goods export earnings were 31.2 percent lower than in the previous period, largely due to a 40.5 percent fall in copper export earnings following the drop in both realised prices and export volumes,” he said.

Non-traditional exports decreased by 3.3 percent due to lower earnings from petroleum products, fresh fruits and vegetables, electrical cables, raw hides and skins, gemstones, cotton lint, industrial boilers, cement and lime, electricity, sulphur, copper wire and fresh flowers.

Meanwhile, rising demand for the dollar amid low supply and a stronger greenback has resulted in a weakening Kwacha against major currencies.

8 COMMENTS

    • Increased spend on public works, tarred roads (what we define as “development” in Zambia), worse – unbudgeted spend has ballooned the budget deficit. All for political self preservation. Sometimes you just have to say “no” to those relatives trying to ween money from you Tell them “I need to be stable financially first before I can help you else I, the only one who went to varsity in this family, will go extremely broke and the younger nephews and everyone else will be trapped in poverty BOZ can’t keep lending to grz to fill the gap Inflation will jump

    • Government is just a bigger version of our values. We behave like this in Z – our stupid egos to “prove” that we have “arrived,” go and borrow from other people to give money to undeserving family members, girlfriends and friends (ya starter bosses) who don’t use the money productively. Soon we are broke, borrow till we can’t pay back and lose the “privilege” to borrow, steal to keep up the image, are caught, fired and are back in poverty with the rest of the family and”friends.” Enze wandalama muboyz uja, yaba, muwoneni manje walwanda. Scale that up to government, the nation, now! That is Z unless we tone down our egos.

  1. I think the opposition did ask the government to present a revised budget, after the fall in revenue from the mines. But kambwili misinformed us. I think the governor isnt present the true picture here.

  2. Let us wait for Kambwili to say something.Where will PF get money to complete the projects they hastily started? It is clear..governemnt has NO money.. broke broke broke.China here we come.

  3. just 2 months ago, there was a very popular PF explaination using hulligan PF economics that it was because the dollar was gaining against all global currencies in the world. The explaination was as popular as “ifintu ni lungu”. The govenor’s statistics are very revealing, anyway.

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