Zambia targets 5% GDP growth rate , Fiscal Deficit of no more than 3% of GDP by 2020

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Secretary to the Treasury Fredson Yamba
Secretary to the Treasury Fredson Yamba

 

Zambia has targeted an average annual real Growth Domestic Product (GDP) growth rate of at least 5 percent by the year 2020.

In a green paper released to the media today by Secretary to the Treasury Fredson Yamba, Government said that its specific broad socio-economic objectives during the 2018-2020 will include, maintaining single digit inflation in the range of 6-8 percent; Accelerating the diversification of the economy, particularly towards agriculture, manufacturing, tourism and energy, through among others, the enhanced use of Information Communication and Technology, in accordance with the Seventh National Development Plan; Increasing international reserves to at least 4 months of import cover; Increasing domestic revenue mobilization to not less than 18 percent of GDP by 2020; Reducing the fiscal deficit to no more than 3 percent of GDP by 2020; Prioritising the dismantling of arrears and curtail further accumulation; and finally Decelerating the contraction of new debt to ensure debt sustainability.

Below is the full statement and you can download a Detailed Report on the Link Below

THE 2018-2020 MEDIUM TERM EXPENDITURE FRAMEWORK & THE 2018 BUDGET DOWNLOAD

THE 2018-2020 MEDIUM TERM EXPENDITURE FRAMEWORK & THE 2018 BUDGET

I am pleased to present the 2018 – 2020 “Green Paper” which is aimed at linking Government’s medium term development goals, as tabulated in the Seventh National Development Plan (7NDP), to their budgetary implications within the current fiscal environment. In over seven [7] years, this is the first time that a green paper is being availed to the public for scrutiny, commentary, and refinement.

Following the implementation of Zambia Plus – The Economic Stabilization and Growth Program (ESGP), a number of positive developments have been attained in 2017. These include the reduction in the inflation rate from a high of around 23 percent in February, 2016 to 6.3 percent in August this year, the appreciation of the Kwacha against major currencies and higher growth projections for 2017 at 4.3 percent compared to the initial forecast of 3.4 percent Nonetheless, challenges still exist on the fiscal front. These include, but are not limited to, the large stock of arrears, for which the Government has designed a medium-term-time-specific-arrears-dismantling-strategy so as to significantly reduce the stock over the medium term.

The 2018 – 2020 Green Paper focuses on sustaining economic growth and development through the continued implementation of the ESGP. The programme is aimed at restoring fiscal fitness and overall macroeconomic stability as a basis for setting a platform for higher inclusive growth, employment and wealth creation in the medium to long-term. In this regard, Government over the medium term plans to prioritize agriculture, mining, manufacturing and tourism as the strategic sectors for the creation of decent employment opportunities and inclusive development.

All stakeholders are therefore implored to scrutinize the 2018 – 2020 “Green Paper” and make constructive recommendations that will enable the finalization of the nation’s objectives over the next medium term period.

In line with the theme of the Seventh National Development Plan (7NDP) which focuses on an integrated multi-sectoral development approach of “accelerating development efforts towards Vision 2030 without leaving anyone behind”, the 2018-2020 Medium Term Expenditure Framework (MTEF) reflects Government’s commitment to ensure that the benefits of economic growth are shared equitably by all citizens. Therefore, Government will work on creating a diversified and resilient economy for sustained growth and socio-economic transformation driven, by among others, the agriculture, tourism, manufacturing and mining sectors.

The MTEF will focus on restoring fiscal fitness for sustained inclusive growth and development. This will be done by realigning spending and enhancing domestic resource mobilisation. Administrative measures are being put in place to strengthen efforts of improving domestic revenue mobilisation so as to meet the medium term revenue targets. This will be through the full implementation of various measures already commenced upon, such as installation of fiscal registers in the retail and wholesale sector and the forensic audit of VAT refund claims to reduce cheating and revenue leakages. Tax payer education campaigns will also be enhanced to encourage compliance, while the introduction and roll out of electronic payments will be followed through in order to limit cash transactions and enhance audit trails.

To complement the various efforts on mobilising revenues, the Government will also continue to engage with Cooperating Partners to increase the level of assistance from 2018 and beyond.

Monetary policy will remain focused on maintaining price stability to support sustenance of macroeconomic stability and thereby aid fiscal fitness, as a basis for higher growth and development.

Maintenance of debt sustainability will remain pivotal in the rebalancing of the Zambian economy. Government’s borrowing over the medium term, therefore, will be guided by the Medium Term Debt Strategy, soon to be published, so as to ensure that the country remains within sustainable debt levels. It is envisaged that the fiscal deficit will be reduced to no more than 3 percent of GDP by 2020.

Further, the Government will continue with the dismantling of arrears owed to suppliers of goods and services, as well as contractors so as to unlock economic activity. The Government has designed a medium-term-time-specific-arrears-dismantling-strategy which will see arrears being gradually cleared, over the medium term, through the use of budgetary provisions and restructuring of some of the components into longer term debt instruments.

In order to support the development trajectory set out for the 2018 – 2020 medium term, the institutional framework needs to be right. As such the Government will continue to follow through with the necessary structural reforms so as to ensure that the medium term Budgets deliver the expected development. This will include the operationalisation of the Project Appraisal System and e-Procurement as well as the revision and enactment of public financial management legislation to ensure effective and efficient use of public resources, improved credibility of the budget and enhanced Parliamentary oversight over debt contraction.

Over the medium term, the Government is also expected to fully phase out electricity subsidies, with the migration to cost reflective tariffs once the Cost of Service Study, which is currently underway, is completed. Mining houses and other bulk power consumers have already been engaged on the need for all to migrate to cost reflective tariffs.

To lessen the impact of the Economic Stabilisation and Growth Programme (ESGP) measures on the vulnerable, the Government will continue to implement social safety nets for the most vulnerable. The Social Cash Transfer Scheme which has proved to be most effective in addressing vulnerabilities will, in terms of both coverage and support be scaled up.

Fredson Yamba
SECRETARY TO THE TREASURY

THE 2018-2020 MEDIUM TERM EXPENDITURE FRAMEWORK & THE 2018 BUDGET DOWNLOAD

25 COMMENTS

  1. Just agriculture alone would have been the major forex spinner had Zambia had the foresight to invest heavily in this sector. Supplying a bewildering array of food to African countries! Countries like Congo and Angola would rather buy food from other countries than grow it themselves. This is the market Zambia should have and must capitalise on! They could even shut the copper mines from which they earn peanuts. It’s painful to see the copper prices pegged by people who doesn’t own the asset!

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    • These targets can be achieved without pushing ourselves so much. Our economy is too small to be targeting such low set targets. For Zambia to reach high levels required for take off we need 10% and above GDP growth rate. The agriculture sector and value addition could easily be the answer. No brainer for me

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    • How can you talk of value addition when you have leadership with a lazy mindset….really laughable..i mean how do you import 2000 solar hammer mills all the way from China. We have also tendering road construction to the foreign firms since the Chiluba days of Phoenix construction, no one has put policies where local firms are empowered.

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    • ****LATEST NEWS****LATEST NEWS****
      CHINA TO BAN DIESEL AND ELECTRIC VEHICLES TO REPLACE THEM WITH ELECTRIC VEHICLES

      France and UK already announced by 2040 to ban the use of petrol and diesel engines China is yet to set a date! This means wiring and conductors will be on higher demand! An electric vehicle uses 40percent more electric wiring and conductors so we expect Copper, Cobalt and other metals to skyrocket!
      Those mines that what to close let them go- we will find other more serious investors in just a few weeks or even days!However let’s use this opportunity wisely! We already messed up in 2012 to 2014 let’s not make the same mistake!
      Important to also focus on agiculture, tourism and services such as I.T etc!

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    • @2020Vision – You have no understanding of how money works hence the reason you support Lazy Lungu’s pilfering…do you know how much tax UK and French govt collect from a litre of fuel at the pump? At least you are now reading that’s a plus

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    • We need 8% growth sustained for 7 years to lift half of our population out of poverty. 3% percent growth is too little. This shows how not focused or is it incompetent this PF govt is

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    • @jay jay, So you think charging an Electric car’s battery will be for free? Do you understand the value chain concept? I’ve been a supporter of OUR govt on areas it does well and where they don’t I have come out against them. Rather than just talk offer constructive criticism. Your friend Chilufya Tayali aka N.E.Z made his criticism known if you love Zambia so much come down or at least post a youtube video rather than the short cuts of lazy this lazy that. But zero…just criticism without solutions..

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    • Hahahahaha! really laughable knowing the PF we are going to get fake figures and if any organization issues statements to the contrary they will be against the government and the great leader Humbly Dumbly.

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    • Ba LT, it is Gross Domestic Product. What does Growth Domestic Product mean? Try editing without Spell Check.

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  2. PLEASE GIVE A BREAKDOWN OF HOW THE NDOLA LUSAKA ROAD WILL COST 1.2 BILLION DOLLARS.
    HOW MUCH WILL CHINESE BANKS MAKE?
    IT IS VERY COSTLY.
    THE MTEF IS A LOT OF WORDS.

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  3. this is painful before Pf we had 6-8% gdp growth on average now we’re looking for 5% at best!?…..Zambia needs at least 7% + GDP growth to reduce poverty levels ….where is the investment in agriculture?

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  4. They have set the base and ground work by doing the roads and other infrastructural projects necessary for growth Mutati has tried to consolidated fiscal within global standards. The monetary appears stable but not developed to grow and deep, the only normal thing after all is done is to Trade in the Investments to realise the shorterm to long-term gains resulting from those investments It can not be as usual So there is need in this discussion paper to emphasise growth strategies and where it will come from especially with the ZRA window tax amnesty window having worked its self

    When you read through elder Yambas discussion paper are you seeing the transition…

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  5. Can you see the focus on sectors with specific emphasis for growth resulting from investments to trade and earn the cash flows for reinvestments into the economy Can you put the GDP numbers and growth projections 5% to see what revenues and funding gaps the MTF will yield or should we ask Good Secretary to Treasury to espand the the scenarios from GDP Douglas cobs to include the bigger much informal sector

    Try to incorporate the informal sector also and flex the GDP numbers through the application of the multiple indicator-multiple cause or the predictive mean matching methods to estimate the true size of what the Zambian economy would be

    We have invested…

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  6. by now its only normal that we trade in the Investments Lets copy from the MADE IN CHINA 2025 plan just like they modelled productivity and consumption using the Germany Industrial 4

    The critical budget factors GDP 5% should be expanded to include the informal and also reflect the need to translate the Investments to Exports in the refined commodities that will require the Made in Zambian 2025 Like others have said it might not be agriculture only driven but a portfolio of carefully waited sectors to support those growth numbers

    Flex the numbers on excel and see what market operation volumes will be result also especially modelling the developments in the…

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  7. in the near markets we have as we expand The Growth figure of 5% is lower though within cycle meaning the DEBT levels might not be achievable hence the need to emphasise productivity and trade in sectors like agricultural and manufacturing you will require 6% to 7% but that requires more fiscal discipline and productivity in the sectors to safe land otherwise you will be lifting the debt ceiling like Trump to raise more instead of addressing the real symptoms to growing and managing the fiscal

    Good initial discussion points in the paper though

    Luangwa tulitwile

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  8. Yangu tata ba ****** Abanabo balebomba bena inchito chilabushiku kuikala mu armchair balenwa tu chayu, balya beeta muchisungu ati “armchair critic”, mu Zambia tutila ati “ama *******”, nangula “kumbele”.

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  9. Elo ngatwafika mu 2021 ati presidential candidate ngumebo7 underfive, I Underfive, my running mate is GBM, oh sorry I meant Chishimba Kambwili.

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  10. When you decomposition sectorial contribution, you need to see which sectors would give you the highest gross value of produce The same should be for agricultural on crop by crop basis commensurate to the volumes to help you raise those revenues though traditional exports will still count much in this short term as the economy diversifies There is a global competitive aspect also for those local new firms to position as low cost competitive producers with the local financial markets playing the role

    So do a sectorial contribution analysis also to the lowest level e.g. soya beans or maize as in agricultural do not ignore also the value of traditional sectors in the…

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  11. Elo ngatwafika mu 2021 ati presidential candidate ngumebo underfive, I Underfive, my running mate is GBM, oh sorry I meant Chishimba Kambwili.
    And they expect to win the votes 50%+1 pa zanja…. kikikikikikikikikiki…

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  12. Elections in Zambia will never be won or lost due to GDP growth numbers .We regrettably kicked out RB who had 6.3% growth to bring in clueless PF with its poor 3% growth figures

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  13. The best and most effective way to make yourself irrelevant in Zambia’s politics is to boycott elections or parliament. You find that life goes on with or without your participation, worse stiil laws may even passed which don’t favour you, after that is the idea of politics, it is to outdo each other (it is not war or an arson competition). So if you are not there to defend your intetest the othet party will not do it for you. On a petsonal level you lose your pay and thetefore you have no money to service your Toyota VX or even buy new tyres at K7,000 each…and underfive does not teplace what you lose…kikikiki. Actually this is the bitterness of UPND* MPs, that after a gruelling 2016 election campaign funded grom their pockets, they are not ministers and therefore cannot repair…

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  14. even if you transformed monze into best city in the world They will still vote for their leader.

    They worship their leader like north Korea

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  15. ….Actually this is the bitterness of UPNDonkey MPs, that after a gruelling 2016 election campaign funded from their pockets, they are not ministers and therefore cannot repair their dilapidated VXs. And Mutati puts the purchase of vehicles for MPs at a bottom of his list….ala bwafya aba ba MP mulemona kuli abanensu ama Donkey. On top of that if the Speaker suspends them, they lose their month’s pay, I hear it is a ka hefty amount, can buy aka mufuko ka bunga.

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  16. did i read something like’ Prioritising the dismantling of arrears and curtail further accumulation; and finally Decelerating the contraction of new debt to ensure debt sustainability.’ this statement is laughable since all projects being launched are loans. how do we reconcile with our high appetite to launch nkongole projects?

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