The Centre for Trade Policy and Development (CTPD) says it is greatly anticipating the presentation of the 2020 National Budget this afternoon.
CTPD Executive Director Isaac Mwaipopo said the budget speech should set a roadmap towards achieving macroeconomic stability and inclusive development through private sector led economic growth.
Mr Mwaipopo said the many challenges the country is facing such as reduced economic growth, exchange rate depreciation, increased inflation, power deficit, and others, can all be remedied by strategically initiating and implementing polices aimed and allowing for a private sector driven economy.
He said the government should use the 2020 budget to show a clear policy direction toward solving current economic issues behind the increased cost of living and poor business environment.
“The Zambian government should set macroeconomic targets aimed at restoring domestic and foreign investor confidence. There is need to commit to at least 5% economic growth, single digit inflation and the restoration of international reserved to a minimum of 4 months of import cover,” Mr Mwaipopo said.
the many challenges the country is facing such as reduced economic growth, exchange rate depreciation, increased inflation, power deficit, and others, can all be remedied by strategically initiating and implementing polices aimed and allowing for a private sector driven economy.
“If government is to reduce its domestic borrowing, the private sector would benefit through reduce interest rates and thus increasing private investment and growth.”
Mr Mwaipopo suggested that Government should increase the 18% of GDP domestic revenue collection target by improving tax compliance especially within the informal sector-without the need to increase taxes.
“Through the crowding-in of the private sector, government can reduce the budget deficit to less than 5% of GDP as an indicator of austerity measures.”
He said there is an urgent need for the government to utilize Public Private Partnerships (PPPs) in the construction of much needed infrastructure across the country.
“This approach has the ability to reduce the pace at which public debt has been accumulating while still dealing with challenges such as the electricity deficit. This will also help government free-up more resources for allocation towards health, education and social-protection, items which had reduced budget share allocations in the 2019 budget as compared to the 2018 budget.”
He said CTPD expects the 2020 budget to allocate more resources towards the social sectors and also limit debt financing.
“In order to further reduce interest payments, government should restructure its debt profile and avoid commercial borrowing. CPTD believes that the private sector and Zambians at large are subjected to a high debt and tax burden.”
Mr Mwaipopo said the 2020 budget should therefore not focus on increasing taxes since this would reduce disposable income and result in lower economic activity.
“The proposed Sales Tax Policy should
therefore be suspended pending a thorough investigation as suggested by the new Minster of Finance. Introducing sales tax would result in lower tax compliance and the cut-off of distributor in the whole-sale and retail sector, while also increasing inflation.”
“Government should identity policy measures aimed at dealing with the limitations of the current VAT system,” he said.
I agree with this.