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
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  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.
SECRETARY TO THE TREASURY