Friday, February 23, 2024

Minister of Finance’s full report on the Status of Zambia’s Economy in the First Quarter


Finance Minister Margaret Mwanakatwe
Finance Minister Margaret Mwanakatwe

1. Highlights of Macroeconomic Performance 2018

i) The economic environment is largely stable and GDP growth projections for 2018 remain on target, building on the 4.1% growth rate registered in 2017. The exchange rate of the Kwacha against major trading currencies remained stable while inflation is within the targeted 6 to 8% band margin.

ii) Fiscal discipline is at the core of fiscal management. As a result of measures taken, the 2017 budget deficit recorded at 6.1% a rate that was below the 7% projection.

iii) Management of the country’s debt has been prioritized. Regulatory and administrative measures to slow down the growth of the debt stock have been put in place in accordance with the medium-term debt strategy.

iv) Let me now highlight a few specific performance updates.

1.1 Fiscal Management

i) Attaining fiscal prudence through lowering of the fiscal deficit, better cash management and timely provision of funds to the sectors is the key to fiscal management.

ii) Tax compliance at below 60% of the eligible tax payers remains a challenge. Corporates and Citizens should note that the more tax evasion we have the more a few people face the tax burden. Therefore, strengthening tax administration as opposed to introducing new taxes will be the strategy.

iii) For the quarter ended, total revenues and grants amounted to K12 billion against a projection of K12.04 billion. Higher collections were achieved for VAT, which compensated for lower performance in other revenue categories such as customs and excise, and non-tax revenues.

1.2 Exchange rate of the Kwacha

The Kwacha made gains against the US$ dollar in March 2018 on the back of net supply of foreign exchange. During the month of March, the Kwacha appreciated by 2.1 percent against the dollar to an average of K9.5859/US$ relative to the February average of K9.7926/US$.

1.3 Lending Rates

Marginal decreases have been recorded in interest rates that fell to 24.1 percent in March 2018 from 24.6 percent in December 2017. This notwithstanding, Government through the Central Bank is working on measures to make the cost of credit affordable as these levels are still very high. On its part, Government has put in place a programme to pay local contractors what is owed to them to reduce stress on the financial sector and allow for normalization of lending conditions on market. The second quarter will therefore see substantial movements on payments to contractors.

1.4 Inflation

At 7.1 percent, inflation remains within the medium-term target range of 6-8 percent. The rise in inflation was mainly attributed to the increased price of petroleum products and the subsequent rise in transport costs, as well as reduced supply of selected vegetables.

1.5 Debt Management

Zambia’s reconciled debt stock is currently at US$8.7 billion. The larger part of the increase due to the reclassification of the US$500 million fuel debt that was reconsolidated in the external debt.


ii) Domestic debt stood at K50.9 billion at the end of the first quarter while arrears were K12.7 billion as at end 2017.

2. 2018 OUTLOOK

i) We expect continued positive growth and macroeconomic stability in 2018 with GDP growth projected above 4 percent. This is premised on positive performance in the agriculture, mining, construction and manufacturing sectors. Inflation is expected to remain within the projected single digit target range of 6-8 percent.

ii) Consistent with the fiscal consolidation stance, the Government is working towards the end-year fiscal deficit target of not more than 6.1 percent of GDP on a cash basis.

iii) In addition, to support macroeconomic stability, government will continue to undertake measures aimed at maintaining debt sustainability.

3. Government’s Taxation Regime

i) In recognition of Government’s need to finance the various development programmes, Government is implementing several policy and structural reforms under the Economic Stabilization and Growth Programme (ESGP). The ESGP emphasizes the need for the country to finance its development agenda from domestic resources, while reducing external dependence.

ii) This Government recognizes that financing its development programmes from debt and hand-outs from cooperating partners is not sustainable. The country has immense domestic revenue opportunities yet to be fully tapped.

iii) Zambia has for years relied, for its domestic revenue, on a few sectors and tax types, a situation which is one of the constraining factors to higher growth and shared prosperity. This must not continue if poverty has to be effectively tackled. Government has to respond to such low levels through strengthening compliance and broadening the tax base. While doing so, Government will continuously and as appropriate, review its tax regime so that it does not disrupt economic activities.

iv) Government endeavors to ensure fair taxation while at the same time raising sufficient resources to deliver public services including up-scaling social protection programmes. For instance, on Social Cash Transfer, beneficiaries have increased to 700,000 in this year’s budget from 590,000 in 2017. The trend is similar to other social protection programmes. This is in addition to scaled up public investments in education, health and physical infrastructure.

v) For sustainability, these programmes must rely on domestically generated resources. Relying on domestic resources will also avoid increasing the debt overhang on our future generation. We have to be responsible for our own development and everyone has the obligation and ability to contribute by meeting their tax obligations to support Government’s initiatives. Meanwhile, Government will ensure that the ordinary and poor Zambians are insulated from any reforms that may erode their livelihood.

vi) It is important to state that the higher the compliance levels, coupled with a broadened tax base, the higher the chance that Government will over time, reduce the tax burden on a few tax payer and make taxation equitable.

4. Policy and Structural Reforms

i) Since 2017, Government has been implementing several policy and structural reforms under the Economic Stabilization and Growth Programme (ESGP). The ESGP is a three year programme up to 2019. To-date notable progress has been made in the areas of agriculture, energy and legislation.

4.1 Agriculture

• Reviewed the farmer database and reverted to 1 million beneficiaries from 1.6 million beneficiaries

• Totally migrated to E-Voucher for delivering FISP

• Implemented the 500,000 MT limit of food purchases by FRA

4.2 Energy

• Undertaken interim electricity tariff adjustment of 75 percent

• Undertaking the Cost of Service Study

• Review of the financial and operational sustainability of Zesco commenced and ongoing

• Development of the framework for full engagement of the private sector in importation of petroleum products advanced

• Public Financial Management bill in parliament

• Amendments to ZPPA Act advanced.

• Planning and Budgeting bill also advanced.


ii) Government will continue to undertake reforms as outlined in the ESGP.


i) The point of discussion with regards to the IMF programme is the issue of debt management. We are currently carrying out a detailed debt sustainability exercise that will give us the current debt parameters and the path we may have to take going forward.

ii) This will be completed in the next two weeks on which basis we can take the discussion with the IMF forward and find a settlement.


    • I really do not care if Zambia’s economy is health or not! Zambia’s economic outlook is of no consequence to me at the moment, mine and that of the majority of the Zambians is. Only yesterday we were told Zambia is number seven best economy in Africa and today we have some random woman reading things out to us! GO AWAY MARGARET! You shouldn’t even an MP or a Minister of any sort.

    • A woman, and not that bad looking. Umukashi wakwa Mupanga.
      But I don’t think she is better than Felix Mutati.
      Nawakwi was both, hotty & a leader.

  1. Interesting indeed, at least we have a breath of fresh air in that she is able to give quarterly briefings. The only area am concerned about is that debt of US 8.7 billion. Am not sure is this is the true debt. Otherwise thumbs up.

  2. How can you say things are happening in Zambia when you go in the story given by Mwanakatwe is just confirming that Zambia is in bad debt 3 times the National collections. Nowonder PF is trying to charge K5 levy on every mobile phone users so to cover all Zambians. Think about K5x 10 million mobile subscriber per month, is that stealing or day-light robbery from the poor Zambians?

    • Sena, these taxes that are backed by pronouncement alone, no justifiable, reason must be stopped. Start with TV levy, borehole fee, talktime levy, etc. All these frivolous acts of naked fleecing of the public must be stopped.

      Seriously how does the government that has lamentably failed to pipe water to all areas where it is needed regulate innovative ways of indigenous people tapping from a natural source? What is the government going to do with at money anyway?

  3. Govt should be blamed for high interest rates because of domestic borrowing.better pass part of that bulk to citizens

  4. We appropriate the quarterly updates. Only hope it is not copy and paste from other documents. There is need for her to go round the country and feel the real situation. It takes months for government to fund its own activities. On FISP, some farmers have not been cleared which means they donated their K400. It works to improve the lives of the majority

  5. Margret Mwanakatwe on IMF programme is economical with the reality of truth. She says “currently a debt sustainability exercise is on to give us current debt parameters that will provide a path for the nation going forward with IMF discussion”. To begin with, the nation has not been informed by PF government what level of agreements/disagreements IMF has provided to the nation. secondly, Zambians are not incapable of finding out what has happened with IMF discussions. Felix Mutati breathed so much hot hair that came to nothing.
    Mwanakatwe’s mention of the current debt stock of $8.7 billion is highly questionable given conflicting numbers provided by IMF. As at now all discussions with IMF are on hold pending Zambia to clean its house.

  6. “Zambia’s reconciled debt stock is currently at US$8.7 billion”. That is a big blue lie.
    This woman thinks most Zambians are dull like the average PF cadre.Everybody knows that the debt to Chinese corporations like AVIC and Topstar does not even touch the treasury.
    Tell those lies for ECL and not the Zambian people .

    2012: $1.31 billion
    2013: $1.25 billion
    2014: $1.58 billion
    2015: $2.21 billion
    2016: $3.46 billion
    2017: $4.20 billion (estimated; breakdown further below)
    2011: $3.50 billion (cumulative external debt stock from previous government)
    EXTERNAL DEBT TOTAL: $17.5 billion (2017)

    2012 | $228.9m | $67.7m | $296.6m
    2013 | $97.7m | $63.1m | $160.8m
    2014 | $55.3m | $130.0m | $185.3m
    2015 | $136.8m | $172.6m | $309.3m
    2016 | $169.0m | $315.0m | $484.0m
    2017 | $200.0m* | $400.0m* | $600.0m* (*estimated)
    SUM | $887.7m | $1,148.3m | $2,036.0m

    NET EXTERNAL DEBT 2017: $16.6 billion
    ($17.5 billion less $0.888 billion principal amount debt servicing)

    The Finance…

  8. How many real jobs have You created ?

    And we don’t mean seasonal labourers and selling talk time jobs…..

    The Finance Minister stated in Parliament that the domestic debt stock stood at K38.6 billion and domestic arrears were K17.4 billion. Adding these two figures produces K56.0 billion. The exchange rate in May 2017 was K9.30 per Dollar. Therefore, the K56.0 billion local debt based on government securities plus arrears as of May 2017 is at least $6.0 billion. In December 2016, Mr Mutati revealed that K8.7 billion was owed to local contractors which is $840 million using the exchange rate at the time (K10.36/$1.00).
    LOCAL DEBTS TOTAL: $6.84 billion

    NET DEBT GRAND TOTAL: $23.4 billion ($16.6 billion + $6.8 billion)

  10. My analysis of the article for those interested (note I included personal opinions as well).

    #1: 2017 growth rate 4.1%, inflation 6-8%
    #2: and #3: nonsense. The debt grew instead and there is reckless spending.
    #4: wtf? Why this is a bulleted item?
    #1.1 FM
    #1. theory that every high school kid taking economics elective knows
    #2. tax compliance record is < 60% from both citizens and companies. Government strategy = strengthen tax administration
    #3: I have no info. My opinion, Zambia has bad book keeping history
    #1.2: no comment
    #1.3: this is the #1 thing that should fixed. It is a result of bad policies, lack of trust between corporates and citizens etc. Basically there are very high levels of greediness.
    #1.4: current inflation rate 7.1 % . volatile, much dependent on…

  11. ctnd…..
    #1.4: current inflation rate 7.1 % . volatile, much dependent on things like petroleum products. My opinion: we need Zambian companies working on securing long term petroleum products and merchandisation. Think Total or BP
    #.5: External debt US$8.7 billion. You can see for yourselves. domestic debt K50.9 billion. How many years since HIPC debt relief?
    #2: 2018 outlook
    #1, #2,#3: Above 4% GDP projection. The rest is theory, you can skip
    #3: Government tax regime
    #1: theory,
    #2:, #3: this is obvious. we rely eg too much Copper to generate revenue. Government needs to create trunk infrastructure to make it possible do
    normal business in Zambia. Zesco for example does not realize that by not providing enough energy and charging affordable process small business die and…

  12. ctd….
    #2:, #3: this is obvious. we rely eg too much Copper to generate revenue. Government needs to create trunk infrastructure to make it possible do
    normal business in Zambia. Zesco for example does not realize that by not providing enough energy and charging affordable process small business die and many cannot be created. Phone and data bills are equally high. Many small business are crushed because of this.

    #My Summary
    24% lending rates
    75% hike in energy tariffs who will do business in Zambia? This means less productivity & less tax collection
    #5: more debt might on the way from IMF. Where are the 3 Euro bonds? GRZ do you have conscience at all?
    My wish for Zambia: invest in education, health care, quality trunk infrastructure, independent judiciary, have a small and…

  13. ctd…

    My wish for Zambia: invest in education, health care, quality trunk infrastructure, independent judiciary, have a small and well defined government and introduce medium and long term planning

  14. The main problem lungus GRZ has is most citizens do not trust them….that is only less than half of the voting public trust PF and lungu with what ever they say…..this has been made worse by having outright liers in the 2 chandas at statehouse being PF spokes men…..together with the disastrous PF and statehouse stated policy of not responding to accusations of lungu being a corrupt theif….

  15. Imwe! The economy is bad.The Government is not paying contractor in various ministries meaning a certain section of society in a country is suffering because the government is holding on to their money. Hence people are suffering and calling for Edger’s blood.This scenario never happened in MMD and we strongly regret putting PF in power.

  16. According to World Bank rankings, Zambia is 4th on highest unequal income distribution behind South Africa, Namibia, and Botswana… any thoughts on this madam Minister?

  17. There is no amount of sugar coating by this bank clerk that will deny the fact that Zambia’s economy is nothing but junk! She can take the junk and shove it up her backside where it never shines and stinks!

  18. Maimane tells Gauteng to expect a blue tsunami in 2019
    Maimane tells Gauteng to expect a blue tsunami in 2019
    The Democratic Alliance (DA) is more confident than ever that Gauteng will be blue after the 2019 General Election.

    Leader of the DA, Mmusi Maimane, told delegates at the Federal Congress, that the African National Congress (ANC) should expect a tsunami to sweep through the province next year, following the significant gains that were made at the Cities of Johannesburg and Tshwane at the last Municipal Elections.

    Maimane has been given a mandate, by the DA, to spearhead the 2019 election campaign for the DA. The Leader of the Opposition is oozing confidence.

    “Many people did not believe the ANC could lose, yet now they are learning what its like to be in opposition,”…

  19. Debt has risen to astronomic levels ,poverty has increased and economic growth has been flat since PF came to power. Oh ,did i mention the Fitch downgrades and the cholera?

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