Finance Minister reveals that Government Spent more than it projected in the National Budget

Minister of Finance Dr Situmbeko Musokotwane has disclosed that in the first quarter of 2023 the Government spent more than it projected in the National Budget.

During the 2023 budget and economic performance symposium in Lusaka on Tuesday, Dr. Musokotwane said the difference in revenues collected versus expenditures amounts to a deficit of K12.7 billion for the first quarter of 2023.

He said this is an improvement compared to the fourth quarter of 2022 in which the deficit stood at K16.31 Billion.

On revenues, Dr. Musokotwane said revenues and grants collection amounted to K26.3 billion, 2.6 percent above the targeted revenue collection for the first quarter of 2023.

“Total revenues and grants collection amounted to K26.3 billion, 2.6 percent above the targeted revenue collection for the quarter. This was largely due to favourable performance in VAT and exceptional revenue collected from ZICTA from the sale of bandwidth spectrum. Non-tax revenue collections amounted to K4.2 billion against a target of K3.83 billion. The collections from ZICTA largely accounted for this outturn. In terms of spending, we released K38.5 billion to implement various projects and programmes, against a target of K37.8 billion. Notable expenses were as follows: Personnel emoluments amounting to K10.8 billion, 4.8 percent below the projection; Use of goods and services amounting to K3.7 billion against the target of K3.4 billion, mostly for procurement of drugs and medical supplies; Releases towards transfers and subsidies amounted to K7.0 billion, 1.6 percent above target,” he said.

“Funds went to the following notables arrears FISP; CDF; grants to schools, universities and hospitals; among others; Social benefits exceeded the target by 65.5 percent at K2.1 billion against the target of K 1.3 billion. Most of the resources went to the Pension Fund and the Social Cash Transfer; Capital expenditures amounted to K2.3 billion and were 34.3 percent below target. Funds went towards roads, fuel depots, water projects and other infrastructure; and governments released K3.3 billion for assets and liabilities, close to double the allocation of K1.1 billion. Funds went towards dismantling of arrears and empowerment funds. This difference in revenues collected versus expenditures amounts to a deficit of K12.7 billion for the first quarter of 2023. For the fourth quarter in 2022, the deficit stood at K16.31billion,” Dr. Musokotwane announced.

Dr. Musokotwane emphasised that Zambia must aspire for much higher economic growth as a way of attaining meaningful impact on job creation, poverty reduction, and improvements in the lives of the people.

“As I always state, we must aspire for much higher growth, year after year. It is only when the economy is growing, preferably in double digits that the growth can have a meaningful impact on job creation, poverty reduction, and improvements in the lives of the people. Government is working on various initiatives to unlock this higher growth. Currently, our country is faced with the challenge of huge demand for grain and other products from the region. This demand has caused mealie meal prices in Zambia to rise and affect our people. In the immediate response, the government heightened security against illegal exports.”

“Also, the government encouraged the local private sector to import mealie meal from other surplus countries for sale at border areas in those towns that are next to countries with deficit food availability. But we all know that the ultimate solution to the food deficits in the region should be a sweet one for Zambia: 5 let us produce more food and export to the countries in need. This will earn dollars and create jobs. Some of the food will be produced by our existing small, medium and commercial farmers. However, the export market is so huge that it is necessary to bring in extra skills and capital,” he stated.

On manufacturing, Dr. Musokotwane said he is seeing a lot of interest and therefore potential for growth in the sector.

“Of special mention is in the area of fertilisers. Until recently, Zambia was totally dependent on imported fertilisers. Because of the conducive business environment, major investments have been made in the sub sector. As I have been informed, Zambia now has self sufficiency for basal fertilisers and in the next few years will be exporting some. For top dressing fertilisers, the plant whose works the president flagged off last week will also lead to self-sufficiency in a few years. These are examples of what is happening in manufacturing. 8 The government will double its efforts in combating red tape in the facilitation of investments in all sectors. This should also be understood by all officials in the public sector who are fond of frustrating investments that the government will not tolerate such practices,” he said.

Dr. Musokotwane further provided preliminary numbers for the external sector for 2022 which he couldn’t highlight at the end of the fourth quarter of 2022.

“We did not have preliminary numbers for the external sector for 2022. I therefore wish to report on performance in 2022 as follows: Preliminary data indicates that the balance of payments position deteriorated in 2022 as a deficit of US$1.3 billion (4.4 percent of GDP) was recorded compared to a surplus of US$1.5 billion in 2021. The nation recorded a reduction in the current account surplus and a widening of the financial account deficit. The current account surplus reduced markedly to US$1.15 billion (3.9 percent of GDP) in 2022 from US$2.68 billion (11.9 percent of GDP) in 2021. This was largely driven by a decline in net merchandise exports and expansion in the services account deficit. What is gratifying was an increase in Non-Traditional exports, which increased by 19.2 percent to US $3.1 billion from US $2.6 billion in 2021. Copper export earnings fell by 3.2 percent to US $8.1 billion from US $8.3 13 billion in 2021, reflecting lower copper prices and export volumes,” the Finance Minister said.

“The reduction in export volumes was underpinned by a decline in copper output amid low ore grade, operational challenges and routine closures for maintenance at some mines. The measures that I outlined earlier on are intended to reverse the outcome above and push mineral production upwards. Let me now turn to where we are with regard to the IMF programme and debt restructuring. (iii) IMF Programme Members of the Press; You may recall that during the period, 22nd March, 2023 to 5th April, 2023, the IMF undertook a mission to the country for the first review under the Extended Credit Facility, and for Article IV Consultations. You may further re-call that following the review, Zambia and IMF staff reached a Staff-Level Agreement on economic and financial policies that will anchor programme implementation for the next 12 months. The agreement is subject to approval by the IMF Management and the Executive Board once the necessary financing assurances have been received,” Dr. Musokotwane.