Friday, March 29, 2024

2016 Budget Insensitive to the harsh Economic Realities of Most Zambians

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Finance Minister Alexander Chikwanda
Finance Minister Alexander Chikwanda

The Jesuit Centre for Theological Reflection(JCTR) has said the 2016 budget is insensitive and unresponsive to social and economic challenges Zambians are currently facing.The JCTR also noted with concern that the allocations to social sectors have shown reductions in nominal terms like Education (K290.11 million) and Health (K32.24million) while others have seemingly increased e.g. Social protection (K15.96 million).Budgetary increase to the economic sectors has equally been muted with only Empowerment Fund and Rural Electrification increasing by more than 100% and a K1,000 million plus increase to the Road Infrastructure fund. The JCTR noted that in the past, CEEC and other empowerment funds have been abused targeting the wealthy and have had high default rates. JCTR hopes that government will use hindsight in ensuring that these large sums of funds are used in to reap sustained business growth especially for the youth and women who are a vast majority targeted with these empowerment funds as opposed to being abused especially that 2016 will be an election year.

Below is a full press statement

?On Friday 9th October, the Minister of Finance Hon. Alexander Chikwanda presented the 2016 national budget to the National Assembly. The Minister proposed a budget of K54.14 billion compared to K46.67 billion in 2015. The national budget is a very important policy instrument for economic development and poverty reduction. Coming at a time the economy is experiencing extreme pressure with a lot of people struggling to make ends meet; most people including the JCTR were expectant of how the 2016 budget will address some of the pressing needs.

Reduced funding to Social Services
JCTR however notes with concern that the 2016 seems to be insensitive and unresponsive to social and economic challenges people are currently facing. While a few concessions have been given to sectors like the energy sector to spur growth of the sector and mitigate the current energy deficit, individuals have been left in the cold. Even the standard adjustment to the tax free Pay as You Earn threshold that is given on annual basis to cushion workers from inflationary pressures has been denied in a year when the cost of living has seen enormous increase.

People with disability who also receive increase in tax credit have not received anything. JCTR also notes with concern that the allocations to social sectors have shown reductions in nominal terms like Education (K290.11 million) and Health (K32.24million) while others have seemingly increased e.g. Social protection (K15.96 million). However these reductions and increases put in context of the high inflation show that allocations may have remained the same (for the increases) and reduced much further (for the decreases).

While we appreciate Government’s stance of slowing down on the expansionary path it has been treading on the past four years, it would be harsh to pay a blind eye to the worsening social conditions of the people.Budgetary increase to the economic sectors has equally been muted with only Empowerment Fund and Rural Electrification increasing by more than 100% and a K1,000 million plus increase to the Road Infrastructure fund. It is noted that in the past, CEEC and other empowerment funds have been abused targeting the wealthy and have had high default rates. It is JCTR’s hope that government will use hindsight in ensuring that these large sums of funds are used in to reap sustained business growth especially for the youth and women who are a vast majority targeted with these empowerment funds as opposed to being abused especially that 2016 will be an election year.

Misplaced expenditure

General Public Services which is mainly recurrent expenditure has recorded the highest allocation of all the sectors. Out of approximately K8 billion increase in the 2016 budget from the 2015 budget, about K6 billion will go to the General Public Sector with Interest repayment on both domestic and external debt and establishment of a sinking fund consuming almost K3 billion. JCTR also observes that while K0.5 billion has been allocated to the creation of a sinking fund to help in the repayment of the Euro Bonds when they become due. While it might be regarded as a prudential act to set aside funds for a future dry spell, it might be imprudent to do so when you have a huge deficit. It means that you are borrowing money to save instead of investing in projects that can give the country some returns.

It means that you are borrowing money to save instead of investing in projects that can give the country some returns

Increase in fees to access government services

On the revenue side, JCTR is concerned that the percentage by which the 2016 budget will be financed from taxes has reduced from 67% targeted in the 2015 budget to 57%.. This consequently will result in increased borrowing as can be seen from the doubling of the foreign financing component from K4 billion in 2015 budget to K8 billion in 2016. JCTR further notices with concern the gigantic increase in non-tax revenues from K3.8 billion to K11.7 billion. One key change noted is ??that of the enormous increase in the fines and fees from K468.58 million to K7, 645.3 with mention that the forestry and immigration fees will be hugely affected.

It is hoped that there will not be arbitrary increase especially in fees to access government services as this would thus impose an unnecessary burden on citizens who also pay taxes.

Reduced contribution from Mines

Another change is that Mineral Royalty tax has been re-classified under Non-Tax revenue though its importance in terms of contribution to the revenue cake has drastically reduced from contributing 12% to below 3%.

Citizens should have access to Yellow book
The Centre also notes with concern the reduction of grants which have almost halved from the 2015 budget. Donors need to demonstrate their commitment to supporting third world countries development agenda like Zambia by increasing financial support and a stronger partnership in the implementation of the Sustainable Development goals. While the budget speech may have showed some good budgetary allocations; the devil might be in the detailed budget. We call upon government to quickly release the yellow book to enable citizens do a detailed analysis of the budget. We also urge government to be prudent in its spending and ensure that planned activities are implemented as planned as only this will safeguard our past achievements and secure the future as the budget theme states.

6 COMMENTS

  1. The other day I was arrested by our professional traffic officers. I gladly paid the fine and was given a GRZ receipt. We shudnt complain over little things like fines. This is our Zambia and we have to help government to pay our ophans in the civil service. JCTR is such a big organization raise such trivial issues.

  2. Can someone update us on the salaries for civil servants? Are we going to get our October salaries? Please ba PF, twafya kunsala!!!!

  3. Its like there is no budget consultation in entities and association the Pre Budget submission must take care of all these ideas though some how the theme must converge in what is ranked given the debt to equity financing on the Budget

    On the Contrary,according to the GLOBAL WORLD FOOD PRICES AND INDEXES the global food prices have fallen if you look at JUNE 2015 to current So what is driving the PRICES in Zambia??? and what is the Policy decision there is in view of global food Prices falling by 14 % at most recently Is this in accordance with statements above or its a Zambian isolated case looking at comments from HH again adjusting for any kwacha losses…

  4. or Should we tap in more investments available in the USD Billions in agricultural SECTOR to secure the food busket in capital available to reduce the cost push or is it simply waste or inefficiencies in distributions of agriculture produce to the need or should the case to import favourably if its the case of supply demand

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  5. most of it is structural For instance look at the collection of RENTALS from the point of LANDLORD as opposite to the withholding system

    It will be difficult to audit and activate the revenues as it will be difficult to differentiate owner occupied against a PAYING TENANT otherwise the thinking is correct

    On electrification I think its within electrification rate in the region and not the worst but of course one would wish much from limited budget What is the long-term may be should be the answer

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