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Thursday, January 27, 2022

Musokotwane, the budget and a balancing act

Columns Musokotwane, the budget and a balancing act

By Chimwemwe Mwanza

Dr Situmbeko Musokotwane’s initial but short stint as Finance Minister during MMD’s reign thrust him into spotlight as a fiscal hawk. Rightly so, he reigned in on excessive government spending while managing to place the economy on a firm growth trajectory.

In fact, it was Musokotwane working together with Felix Mutati as Commerce and Industry Minister in the then economic cluster that presided over a consistent 6% economic growth streak in the country’s Gross Domestic Product (GDP) – last experienced during MMD’s latter years in power. While his predecessor Ng’andu Magande is credited for laying the fundamentals for economic growth, it is Musokotwane that picked up the baton to successfully navigate Zambia’s path to debt consolidation.

Slightly a decade later and after the MMD was ousted from power, Musokotwane was back in parliament last week Friday to continue from where he left – albeit to present a budget for a different government. During his previous reign, economic fundamentals were strong. The mining sector was experiencing a stellar growth run largely helped by a commodities boom.

Last week Friday – on his second home coming, Musokotwane was staring down a radically changed economic environment. The country’s huge foreign reserves which he bequeathed to his successor in the PF government, Alexander Chikwanda have all but been wiped out leaving him with little margin for error. The mining industry is limping and the intermittent power cuts that lasted through to August 2020, decimated several small to medium size businesses.

Faced with a shrinking tax base, rising inflation and an insurmountable mountain of debt servicing obligations, a fiscally prudent budget would have been a natural default option for Musokotwane – and more so given the UPND’s electoral commitment to reign in on excessive spending. Instead, he opted for a populist budget – one that will see Zambia’s debt position shoot through the stratosphere.

Let’s put this into context, Zambia’s external debt currently stands at K249bn against a projected K170bn earmarked for spend in the UPND’s maiden budget. Off significance, tax collection agency, the Zambia Revenue Authority (ZRA) is projected to contribute roughly K97bn to the fiscus with the balance expected to come from foreign financing agencies including the International Monetary Fund (IMF). This is a huge statement of intent. By implication, Zambia is going to continue a on a borrowing trajectory.

Even more worrying is the fact that government has allocated nearly 68% of the budget estimate to expenditure consumption – a tacit indication that the state will soon be raising its begging bowl to its donors asking them to fund its pro-consumption budget. While encouraging that 44 000 new jobs spread across the broad spectrum of the economy will be created, it’s worrying that this will be achieved by bloating and an already overstretched wage bill – a classic example of the more things change, the more they stay the same.

For example, how does one reconcile the fact that government intends to spend K170 bn in a single fiscal year yet the return on spend is an envisaged 3.4% growth to its GDP? Here is a challenge though, government can’t keep borrowing to fund consumption – and this is something that President Hakainde Hichilema kept harping on while the UPND was in opposition. Did it even make sence to allocate the bulk of this budget estimate to non-productive sectors of the economy?

A case in point, why should defence be allocated K7.6bn? While this may seem like an overly simplistic question, Zambia is not a country at war? Government can’t spend its way out of an economic morass through recklessness. Even more alarming is the fact that we have been through this path before which largely explains the US$14.7 bn debt that the former government has saddled the treasury with. Accepting that the new government is in a hurry to implement some of its election promises including the controversial promise ‘to adopt free education’, this is not reason enough to discard fiscal prudence.

Most important though, the level of transparency and detail in the information provided in the budget is a marked departure from the past – a breath of fresh air which perhaps explains why critics may have found it easy to poke holes to this presentation.

It’s perhaps consoling that a budget is just a statement of intent, the real work is in the implementation. We eagerly await outcomes of the new government’s maiden budget.

About the author: He is an avid reader of political history and philosophy. The only thing he supports is Kabwe Warriors and Liverpool. For feedback, contact: [email protected]

26 COMMENTS

  1. perhaps consoling that a budget is just a statement of intent, the real work is in the implementation. We eagerly await outcomes of the new government’s maiden budget. INDEED THE TASTE OF THE PUDDING IS IN THE EATING.

  2. Where will all these 44,000 new employees stay, especially those that will be posted to rural areas? Do we have enough houses and schools to employ especially the teachers? Have they been employed to teach the same useless syllabus that we have? So many questions are being asked.

  3. We belive , with the majority of Zambians working in sync with the UPND ati graft manifesto………..

    Except of course the theiving PF rats and their supporters………

    Things should fall in place……..

    The author notes the similarities in PF budget to the new GRZ one , but does not highlight the difference in manpower and leadership…….

    That is where the difference will be……..strong, prudent , hardworking economic globe savvy leadership based on the rule of law is the ace card of this new GRZ………..

    Watch this space……..

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  4. We belive , with the majority of Zambians working in sync with the UPND ati graft manifesto………..

    Things should fall in place……..

    The author notes the similarities in PF budget to the new GRZ one , but does not highlight the difference in manpower and leadership…….

    That is where the difference will be……..strong, prudent , hardworking economic globe savvy leadership based on the rule of law is the ace card of this new GRZ………..

    Watch this space……..

    2
    5
  5. The author notes the similarities in PF budget to the new GRZ one , but does not highlight the difference in manpower and leadership…….

    That is where the difference will be……..strong, prudent , hardworking economic globe savvy leadership based on the rule of law is the ace card of this new GRZ………..

    Watch this space……..

    2
    5
  6. The author notes the similarities in PF budget to the new GRZ one , but does not highlight the difference in manpower and leadership…….

    That is where the difference will be
    Watch this space……..

  7. We belive , with the majority of Zambians working in sync with the UPND ati graft manifesto………..

    Except of course the theiving PF rats and their supporters………

    Things should fall in place……..

    The author notes the similarities in PF budget to the new GRZ one , but does not highlight the difference in manpower and who is in charge…….

    That is where the difference will be……..strong, prudent , hardworking economic globe savvy presidency based on the rule of law is the ace card of this new GRZ………..

    Watch this space……..

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    5
  8. Even for a losing football team with a change of management, leaving resources the same, results can be drastically improved………

    We belive change in l.e.a.d.e.r.s.h.i.p is what will make the difference………

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  9. Most parts of Lusaka has had a lot of power cuts, in some areas this is the third day without ZESCO power, so how will the projected GDP be attained when some industries are down and in some places people have failed tp prepare themselves to go to work due to non availability of ZESCO power

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  10. Its laughable to say the least with the ‘new’ jobs and removing of fees on education the IMF will frown on your call for budgetary support financing…the mines are in the clear for now..low scale up on agriculture the gold you have but dont use…sorry its another story for the beer hall….

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  11. Abena SPAKA bena bafimwenafye muli tribe and not based on issues…so pathetic. We are commenting on the budget he responds to say PF rats and their supporters!

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  12. #17  SLEEPYJOE
     November 5, 2021 At 12:42 pm

    “Abena SPAKA bena bafimwenafye muli tribe and not based on issues…so pathetic. We are commenting on the budget he responds to say PF rats and their supporters!..”

    Sleepy FYI i am an Easterner like lungu…..

    Before elections , you and your other PF labeled any one who did not support PF as tonga , tribslist , southerners………

    Don’t try to sound holy now PF is out of power……..

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  13. #17  SLEEPYJOE = #19  Issacher

    In the spirit of reconciliation, I shall endeavour never to write the words

    ” PF rats “

  14. @19 issacher
    Gone are the days when it used to fun blogging on Lusaka Times…we had genuine and very Patriot bloggers….Partisan but very intelligent…we had BR Mumba sr,MMD chiefbootlicker, Distant drums, Nine Chale, the attention seeker Mushota, Nostradamus, Katondo boys, Nubian princess etc….but now it’s all about one’s tribe…whether someone is doing something wrong or right….just supporting blindly……am non Partisan but I used to sympathize with PF but how many times have I called them PF as Bandits…I criticize where its necessary and give praise where it’s due….not Spaka and Tarino….they think HH is a small god

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  15. #21 People never learn. We say UWA MATWI NA OMFWE. Even a bad comment can carry positive message. PF thought were almighty until that fateful 12 August 2021 day. This man’s tribal remarks just show that he’s not interested in civil discussion.

  16. #23  Mondo
     November 5, 2021 At 6:09 pm

    “SPAKA

    Sir! What is your profession or what did you study?”

    Sir/Madam ,
    I have said above that from now on I shall blogg in the sprit of reconciliation even though the dirty , incessant tribal attacks and character assassinations on any one not supporting PF still ring in my head……….

    Why do you ask ???

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  17. @ Spaka
    Bloggers are willing to engage you in a civil and respectful manner….you so bent on supporting HH just because he’s your tribesman….this is wrong…let’s all be objective…and don’t think whoever doesn’t support HH hates Tongas…again thats wrong…Zambia is a democratic country and i can support anyone who appeals to me and gives me conveys a message of hope……when HH was in opposition remember how you guys were celebrating misery on fellow Zambians back home…thats not being a Patriot…just love every Zambian regardless of their Political affiliation or tribe….please stop calling fellow human beings rats and please don’t insult me

  18. If this budget means nothing, hell will break loose. H² will be so ashamed. Remember how he used to brag with his parallel budgets?
    This time is like walk the talk.
    Like a cat by the rats hole, I am waiting with keen interest.
    This beans has to cook real good. Ukutikama!

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