The Government will in 2016 limit domestic borrowing to maintain public debt within sustainable levels, FINANCE Minister Alexander Chikwanda has said.
The government is also reviewing the modalities for implementing the Constituency Development Fund (CDF) to ensure communities participate in identifying projects.
In his budget presentation to Parliament yesterday, Mr Chikwanda said the Government would instead focus on accessing external financing with lower interest rates and longer repayment periods.
In addition, the Government would strengthen the project appraisal processes so as to ensure that borrowing is directed to projects with high returns.
To ensure timely repayment of the three Eurobonds issued in the international capital markets, the Government had established a Sinking Fund for the purpose of redeeming the bonds.
The Treasury would act to ensure that the Government expenditure was primarily financed from domestic revenues.
In this vein, the Government has drastically reduced allocations for non-core recurrent allocations by more than 50 per cent and has taken measures to enhance revenue mobilization.
“Consequently the fiscal deficit in 2016 is projected to reduce to 3.8 percent of the Gross Domestic Product (GDP).
“To create room for private sector credit, more room for private sector credit, domestic borrowing by the Government will be limited to 1.2 per cent of GDP in 2016,” he said.
To further strengthen domestic tax administration, the Government would put in place measures that would require Value Added Tax (VAT) registered vendors to use electronic fiscal cash registers that would be interfaced with the Tax Online System.
This would allow real time capture of transactions for VAT compliance and reduce under-declarations.
The Government would also enhance monitoring of cargo movements transiting through Zambia to mitigate revenue leakages.
Overall, financial performance of the banking sector is expected to remain satisfactory in 2016 and the Government is working out modalities to further improve stability in the sector.
The inflation rate was expected to remain single digit in 2016 and upward pressure was expected to come from the effects of the depreciated exchange rate and higher demand for grain in the region.
El Nino was also likely to contribute to upward pressure on food prices, while international reserves were projected to remain at US$3.2 billion even in 2016.
Monetary and supervisory policy formulation would remain focused on supporting Government’s broad economic objectives.
Under structural reforms, cooperatives would be enhanced in all districts and Government would also continue to uphold Public Financial Management through the public finance Act, among others
It is time this ancient fossil retired. He is even having difficulty with basic arithmetic!
He says inflation is expected to be in single digits. Mealie meal prices have just gone up from K70 to K85. That is an increase of 21%. Does that look like single digits to you Mr. Dinosaur?
Growth is expected to rise from 4.6% to 5%. Really? What basis is there for this projection? If the current trend continues we are heading for NEGATIVE GROWTH. So in reality, this is more like wishful thinking than serious budgeting.
Now he is addressing the fiscal deficit and plans to reduce it to 3.8 percent of GDP? With even more Ministries and all to associated costs? Yes, pigs can fly! Chikwanda is dreaming.
In all seriousness, this budget is not worth the paper it is written on. At best, it is…
“Mr Chikwanda said the Government would instead focus on accessing external financing with lower interest rates and longer repayment periods.”
Can the Honorable please just tell us the facts and not hide behind fancy words?
What you are REALLY saying is that for the second time under your watch, Zambia has been reduced to going to the World Bank and the IMF as beggars asking to be bailed out due to Government incompetence and financial mismanagement!
We all know what that means, we have seen it before.
When the government reduces domestic borrowing small people like my self can borrow from the banks and improve my business.
Yes Jason. And you will be paying INTEREST. At what rate?
Well, that depends on INFLATION and with the Zambian Kwacha being the worst performing currency IN THE WORLD due to the MASSIVE BORROWING on Eurobonds which Chikwanda has tried to hush up, very soon it will be 40% or maybe even 50%.
Think you can pay that much and still “improve your business”??
kikikiki you will be lucky if the government would lend you money and from where, the government is broke. Last kicks of a dying horse, remember that a drowning person will even grasp at a straw to try and save him or herself. campaign gimmick my bro.
Bloombergs headline on our Budget-
“Zambia to almost halve budget gap despite surge in spending” ???
How is this possible? Can Lungu and his PF now perform miracles?
Kekekeke! That’s why the ONLY PF alternative is calling for FASTING, PRAYERS and RECONCILIATION with the PF thieves that stole our money!! cnp!!
Cannot contribute objectively to debate because I do not have the details and data on where these projections are based. Hope all is factual or informed opinion, otherwise we will be cheating ourselves.