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Alba Iulia
Tuesday, October 20, 2020

Government Released a total of K14.3 billion to service Zambia’s debt in the first half of 2020

Headlines Government Released a total of K14.3 billion to service Zambia's debt...

The government released a total of K14.3 billion for debt service in the first half of 2020.

According to the Ministry of Finance, domestic debt service payments totalled K8 billion, which included K1.9 billion principle repayments on government securities.

Secretary to the Treasury Fredson Yamba says on the other hand, external debt service amounted to K6.3 billion with principle repayments amounting to K3.3 billion.

“January to June 2020 expenditure performance: Preliminary figures indicate that expenditure in the first half of the year amounted to K46.8 billion, including amortization. Of the total expenditure, K33.7 billion was financed from domestic resources, and K7.9 billion was foreign financed. Personal emoluments accounted for 26.7 percent of total expenditure. During the period under review, K12.5 billion was released to cater for salaries, third-party payments, and overseas allowances for staff representing Zambia, abroad,” he said.

“The total personal emoluments expenditure between January and June 2020 was 1.1 percent above projection. The adverse movements in the exchange rate contributed to higher than anticipated Kwacha equivalencies from the dollar payments. Further, the depreciation of the Kwacha against major trading currencies, led to an increase in inflation, on average. This also led to higher than programmed disbursements for allowances for staff in Zambia’s missions abroad.”

Mr. Yamba said the Treasury also released K3.7 billion to finance general government-wide operations, representing 7.9 percent of total expenditure.

He stated that this was 24.5 percent above projection due to the higher than targeted disbursement of K2.3 billion for the ordinary use of goods and servicescomponent, K549 million for mobile registration, K240 million for compensation and awards, and K112.3 million for national population and census activities.

“The total amount released under the ordinary use of goods and services component also included, among others, K359.2 million for purchase of medical supplies in government hospitals, K146.8 million for contributions and subscriptions to international organisations, and K77.3 million for the skills development levy. Further, a sum of K73.4 million was released towards Covid-19 related expenditure,” he added.

“Expenditure on transfers and subsidies totalled K4.3 billion. Notable items in this category included:1) K1.9 billion for ordinary grants of which public universities got K556.5 million, hospitals K311.4 million, and grant aided institutions in line ministries K598.5 million;2) K585 million to support the operations of local authorities through the Local Government Equalization Fund; 3) K559 million towards the revenue mobilisation activities of the Zambia Revenue Authority; and,4) K518 million released in June for dismantling arrears for petroleum product supplies.”

The Secretary to the Treasury also disclosed that during the period under review, releases under the social benefits category amounted to K602 million.

Mr. Yamba further said of this amount, K550 million was released to finance the pension fund gap against an initial projection of K82.5 million for the period.

“January to June 2020 revenue performance: Total revenue collections and grants amounted to K32.2 billion, 5.1 percent below the projected target of K34.0 billion for January to June 2020. Tax revenue accounted for K24 billion, non-tax revenue K7.5 billion, and project grants K729.6 million.Tax revenueIncome tax collection during the period under review amounted to K14.3 billion against a target of K13.3 billion,” he further stated.

“Mining companies made payments amounting to K2.9 billion as company tax while K6.7 billion was collected from PAYE.
Insurance premium collections amounted to K53.1 million against a target of K59.2 million thusrecording an under collection of 10.3 percent. Citing the impact of the Covid-19 induced economic slowdown on income earning prospects, most insurance sector consumers opted to downgrade their policies from comprehensive to third party, thereby leading to reduced insurance premium
levy collections. Value Added Tax (VAT) collection amounted to K6.06 billion against a target of K9.11 billion. Performance was below target by 33.5 percent, mainly on account of the Covid-19 induced economic slowdown.”

He emphasized that the Covid-19 situation led many companies to scale down production and, in some instances, lay off-workers.

He further disclosed that between January and June 2020, customs & excise duty collections of K3.53 billion against a projection of K4.17 billion, were below target by 15.3 percent.

“This was on account of the closure of trade ports and general activity slowdown at national boarders due to Covid-19 related factors.Export duty collections amounted to K102.4 million against a target of K98.4 million. Collections were above target by 4.1 percent. There was elevated positive performance in precious metals and copper concentrate export in the months of January and February 2020. The substantial gains in
these first two months surpassed the depressed performance (due to effects of the Covid-19 pandemic on the economy) experienced between April and June 2020,” he said.

“Non-tax revenueNon-tax revenue collections during the period under review totaled K7.48 billion against a target of K5.63 billion. The 32.8 percent above target performance is attributed to a dividend received from the Bank of Zambia, and overall good performance in road tolls and revenue collection by the Road Traffic and Safety Agency. The substantial collections in road tolls and levies in the first quarter(January – March 2020) surpassed the depressed performance registered between April and June 2020 due to the effects of the Covid-19 pandemic on the economy.”

9 COMMENTS

  1. It’s good to see we have not defaulted on debts as yet.

    It’s impressive to note the above target performance non tax revenue and aided by Bank of Zambia’s contribution. Road Traffick and safety are becoming impressive performers on par with hard driving ZRA. Congratulations PF in setting performance based targets.

    Like all countries, even in the West our economy has taken a knock but we are clinging on and just a out thriving.

  2. Great economic data but better outcomes would have been realized with better policy making and implementation. Now imagine if we did not have a clueless man in charge? Now imagine if we did not have a fluke like Lungu? We should all work as hard as we can, with all the might we have, for all the time we have, with whatever resources we have, to make sure that Lungu and his PF are removed from managing the affairs of our country next August. Once these clueless, moralless and incompetent gang is gone, Zambia will began healing and better economic data will begin creeping out of the deep hole that Lungu and PF dug. Zambia’s last 4 years have been horribly wasted and disgraceful years under Lungu and PF. We must all vote because at election time, anything will be better than the gang…

  3. Ballooning debts ,huge budget deficits,falling Kwacha and poor economic growth .Lungu has presided over the worst economic performance in Zambia’s history.

  4. That’s debt upon debt. Government issues debt instruments such treasury bills and bonds and then applies the proceeds towards debt service. It doesn’t help the economy at all.

  5. Start real austerity measures to cut down on cost to the treasury. Even some foreign missions can be closed & others trimmed. We need money to create enabling environment for business to flourish. Times are getting harder and harder. Service providers are increasing their charges each month. Who and what is going to stop the Kwacha from falling???

  6. I am beginning to like Kaiser, he is a pompous fool but imagine Lusaka Times with out his arrogant and very ignorant comments.

Comments are closed.

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