Friday, March 29, 2024

The 2020 Budget will not achieve anything tangible – Musokotwane

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MMD Liuwa Member of Parliament Situmbeko Musokotwane
Former Finance Minister and now UPND Liuwa Member of Parliament Situmbeko Musokotwane

Former Finance Minister Dr Situmbeko Musokotwane has charged that the 2020 Budget will not achieve anything tangible because it is a budget for merely paying public service workers’ salaries and servicing national debt.

Dr Musokotwane who is also UPND Chairman for Finance says the budget will be difficult to implement because there is no money for anything else that matters to the ordinary citizen.

In his detailed analysis of the 2020 national budget, Dr Musokotwane said it’s clear from the 2020 Budget that the PF Government has completely abandoned the fiscal consolidation stance that they announced in 2017 under a programme entitled “Zambia Plus” but which they did not respect in the subsequent budgets in 2018 and 2019.

He observed that the PF Government is not slowing down on debt contraction despite the warning not only from the various local stakeholders and the public but also from reputable international organizations such as the IMF and the World Bank.

“We wonder where and how the PF Government will manage to raise the proposed revenues in the 2020 Budget given the current economic haemorrhage and particularly given energy challenges to which, the PF Government have no clue on how they will be addressed apart from blaming it on climate change,” Dr Musokotwane stated.

“The PF Government proposes to raise K106.01 billion through tax revenues (K53.77 billion), non-tax revenues (K17.71 billion) and financing or borrowing (K34.08 billion) as shown in the Table below. (All figures are in millions of Kwacha). Of the total expenditure of K106 billion, the expenditure on Wages and Salaries (Personal Emoluments) will at minimum be K25.60 billion (estimated since no details were given in the Budget Address), debt payment (interest and amortization) will account for K33.73 billion (up by 10.15 billion from 2019 budget) while grants to grant aided institutions such as ZRA, RTSA (which basically are for salaries) will amount to K7.34 billion while the foreign financed expenditure (K30.62 billion) is project support, which will be specifically for the projects for which the money will be borrowed. The government has no discretion on the above expenditure. They must be paid. They are non-discretionary.”

“If we add other politically sensitive expenditures, which are FISP (K1.11 billion), FRA (K660 million) and elections & voter registration (K135 million), a total of K99.21 billion out of the K106 billion will have been taken by these expenditure lines which in budget terminology are called non-discretionary expenditures.”

He added, “Strictly speaking this means that the only amount in the Budget that Government has some discretion on how it can be spent in the 2020 Budget is K6.80 billion. This is the amount envisaged to be used for Government operations, for dismantling of arrears, for providing counterpart funding for capital expenditure, for provision of the social cash transfer to our vulnerable in society, as well as providing health and education services.”

“If we take the Government commitment of K2.28 billion for dismantling of arrears, K2.77 billion Government contribution towards infrastructure development, K1 billion for the Public Service Pension Fund and another K1 billion for the Social Cash transfer, it means we will already have gone over the budget.”

He stated, “In his Budget address, the Minister of Finance stated that the government in 2020 planned to make interventions to improve the social economic conditions of the citizens. Examples include support to agriculture and livestock industries, establishing industrial yards, developing road infrastructure in the northern tourist circuits, recruitment of teachers, etc. Further, it was our expectation that the government would take practical steps to address the plight of the population faced with unprecedented hunger that has befallen nearly half the country.”

“How will the Government then finance its operations, provide medical services as well as education services to its citizenry?”

He charged that the 2020 Budget, though well presented will not deliver the intended results.

Dr Musokotwane said this is a budget whose major priorities are public service salaries and debt service.

“Although the budget has a substantial sum of K30.1 billion most of this will be spent on pre-selected major infrastructure projects like the two airports in Lusaka and Ndola. Vital but smaller projects such as the numerous abandoned rural projects such as district roads, feeder roads, high schools, teachers’ houses, etc will continue to remain abandoned.”

Dr Musokotwane projected that business will continue to be hard because the promised improvement in liquidity in the economy through payment of arrears owed by the government is too little and also uncertain.

He said Government departments will continue to be underfunded and new business from the government will be hard because there is no money.

“These are the biting effects of the debt crisis that we have been warning about and they affect everyone. Sadly, the 2020 Budget is mute on how to seriously address this major crisis that has engulfed our nation,” he said.

31 COMMENTS

  1. Brilliant analysis by Hon Musokotwane
    The fact is that even if the 2020 PF budget of K106.01 billion was increased to K200 billion nothing much is left for development.
    50% goes to Salaries and Emoluments
    40% goes to debt service****
    >10% is left to grow the economy.
    Under the PF , the country is doomed

    • I have to say that as an expert on budgetary processes and their impacted outcomes myself, I totally agree with Bo Situmbeko.

      I can’t even believe I just said that because this is about the first thing we both have ever agreed on in my lifetime but I am a patriot first and a UNIPist second.

      I still don’t like his politics all the way from his MMD days but he’s totally right on policy with his analysis of this budget.

      To add my two cents to Bo Situmbeko’s analysis, this budget is intended to appease the powers that be and is a buyout for service chiefs and civil servants in readiness for elections following the next budget.

      It does not tackle immediate enhancement for factors of production which themselves are the drivers of economic expansion and/or sustainability.

      It’s a…

    • Anything coming from UPNDEAD is negative.
      Negative, negative, negative, Negative.

      Musokotwane, tell the Zambians how many tangible infrastructure development was done by MMD during your tenure?
      Did you actually miscalculate in 2010 by removing the 25% windfall tax with a view to increasing investment in the Mining Sector?
      Did you not say that in 2011 the country had a serious backlog of infrastructure development and that you were hoping FQM would give you money in unpaid taxes? You were blank pal. You were unable to collect taxes too.
      Today you drive on good roads. Uletasha. Sela babombe ababiyo mune. Akalijo failure iwe.

    • Continued…

      It’s a sad day for the smart people of the Zambian Enterprise. Just because it’s a bigger budget doesn’t mean anything, it could as well be a bigger waste of resources than we have ever seen in our nation’s history.

      Totally amateurish … Epo mpelele,

      BRM

    • He got us out HIPC and had an economy growing at 7% when he was Minister of Finance. So he must know what he is talking about. It must be painful for Dr,Musokotwane to listen to people like Maggie Mwanakatwe and Lubinda Habazoka

    • @ 1.4
      It was actually LPM’s magandenomics that got us out’a disgraceful HIPC not RB’s musokotwanenomics.
      Oooooooh! didn’t Zambia sleep under Finance Minister Musokotwane with vasco da banda.

      Musokotwane’s MMD is the likes H² keep yapping about negatively anso. Wasted 3 years, from 2008 to 2011.

      Ususha?

    • Does this man belong to the party Pro. HANSONI in RSA who writes the UN on his University Letterhead about Zambia but he has failed to write anything about murderers in South Africa to the UN or to the Johannesburg Newspaper? CHILDREN PARTY.

  2. i have never heard this gentleman speak positive,it is like he never presided over the same portfilio in the difficult years.

    • But he got us out HIPC and had an economy growing at 7% when he was Minister of Finance. So he must know what he is talking about

    • Is he related to KEBBY MOSOKOTWANE? Kebby was brilliant. Today’s CHILDREN don’t know anything about him because they think CHILD.

  3. but why do pf cadres always look for people to say something nice about pf why who told you that people have to tell you something nice the article highlighted the key points about the budget if something nice was part of the key points am sure he would have highlighted that

  4. I don’t know why he hasn’t taken over from the Sodomite. He appeals to a cross section of Zambians. He is the man for the job. If UPND wants to form Govt in 2021 they must really think about a new candidate and I think Situmbeko has it

    • This is the mature and measured response Mr HH was supposed to give than the bitter way he did it by saying “the budget is useless!” That’s being average and bitter! He was right that this budget is useless but wrong choice of words puts off rational voters! HH must understand that What you say in politics matters less than how you say it! Coming to the budget, the reductions in budgetary allocations to Health and Education and increasing the budgetary allocations to roads speaks volumes about PF’s misplaced priorities in the face of fake austerity! We are finished! Salaries, Debts and Roads is what sums up the 90% of non-discretionary allocations! Crazy! Why not restructure the civil service, retrench excess baggage, reduce size of GRZ, abolish DCs, merge ministries and do away with…

    • and do away with some? The State of the Nation address was indeed a missed opportunity to reset our developmental agenda which would have been a very good preamble for the 2020 budget! We should all prepare to eat snakes (not snacks)!

  5. UPND will never say anything good about PF. Tribalism at it’s best coupled with homosexual president. I hope he doesn’t practice Anus sex with mutinta

  6. Ba Henry calm down, just read if you can read and stop this tribal thing. You talking bad about homos but you live off their aid. Respect HH he is richer than you and has better ideas than the whole lot of PF. If your party listened to him 90% of our problems would not be there. You have been load shedded too much that your brains have stopped functioning. You Zambians will become the laughing stock of Africa, it’s appalling to find people who’re okay living without electricity and water. You have no idea where your country is heading to as your president does no have press conferences but he will go out and address foreigners. That’s someone who doesn’t value you

  7. I fully agree with the analysis above, if a budget is leaning more towards expenditure than growth, then it is a gambler’s budget that is either going to work or may as well be discarded.

    If only PF can listen to the advise of many well meaning Zambians, including HH, We would surely move out of this malaise. Self inflicted debt, coupled with very minimal allocation towards alleviation of climate change, is a suicide to an import oriented country like ours.

    I am equally very pessimistic over this budget.

  8. PF would do well to take heed of what Dr Musokotwane has outlined here. For me, I would summarise what he has dissected from the budget as follow: ” There is no money for anything else that matters to the ordinary citizen”. Literally, Dr Musokotwane is saying that 50% of the budget will go towards salaries and emoluments, 40% will go to debt service and 10% will cater for growth in the economy. On a lighter but serious note, he says given the current energy crisis, the PF government have no clue on how they will address it apart from blaming it on climate change. I wouldn’t agree more.

  9. Achieving Growth Investing and stemming macro indicators is a balancing act that can be achieved over the short to long Clearly the minister has allocated financing towards reduction of loans to achieve prudential macro stability or Debt sustainability

    With limited resource envelope in a typical year he cannot achieve both Its a balancing act and his budget has focused well on addressing what is threatening long-term growth prospects but still control and maintain GRZ services

    If you read his budget theme and see long-term you will see his intelligent orientation to re-balance the budget and fiscas on which to grow the economy for the future Doing both will mean going through…

  10. the same fiscal plans when global risks have increased

    So give him chance and lets see review critically implementation and see achievements in 2021 Budget Its a balancing act you priorities some and overweight others making it difficulty to achieve sustainable growth Sometimes you save consumption and repay to create space for future considering our Revenues and outlays requirements

    See you in 2020

  11. The author of the Poverty Reduction Strateg Paper(PRSP) has spoken.He knows first hand what he is talking about.His analysis/critique is always objective……presidential material.

  12. It’s economists like Musokotwane you appoint to the Treasury, not bankers and bookkeepers who understand nothing about ze za tutuluzi mukwa Namatindi yo, uyoyange wino wino Situmbeko. This is stuff that would make Margaret’s head spin.

  13. Napthali, please stop copying and pasting all this stuff on this blog, it’s so disjointed and clearly Frankesteinian to any scholar of economics. This is very intellectually offensive,

  14. I was watching parliament yesterday I clearly saw that he clearly had missed the allocation strategy and priorities by the Minister of Finance He has been speaking about sustainability and stemming debt levels ,which is good,to create fiscal space for long term on which to grow sustainably the economy but when the minister has allocated ,he has failed to support the Minister in reshaping and re balancing the budget in the short to medium term to create that fiscal space by refinancing and loans repayments that have financed the investments in various sectors of our economy It cannot be both achieved It a balancing act ,given the level of GRZ balance sheet and growth in the areas of our…

  15. Its a balancing act ,given the level of GRZ balance sheet and growth in the areas of our economy that are necessary for those much needed revenues from domestic resources for the social and proper functioning of GRZ He has also failed to see the correlation coefficients of various taxes as a means to spur economic growth The minister has utilized that He concluded by comparing Zambia with other countries like Singapore Now Singapore has not achieved superlative growth and is not any Singapore Growth forecast has like properly assessed by the minister been downgraded to 1% and the economy grew marginally by .1 yoy The manufacturing sector contracted by 3% yoy So it’s a fair…

  16. So it’s a fair assessment and allocation by the minister within the outlooks to ensure he achieve and closes with god balances without being overly optimist and burn the budget and result in negative balances given the low growth environments He cannot achieve both in a year but its well planned in consolidated Fiscal plans and Budgets You can go own and analyse the competitiveness of our taxes investments debt sustainability and budgets revenues and outlays and see the optimization of GDP and allocations He has tried at-least

    I will not respond until 2020 for now following the parliamentary debates on the same budget

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