The United Party for National Development(UPND) President Hakainde Hichilema has said that the national budget that was presented by the Finance Minister Hon. Bwalya Ng’andu, is worrying and a reflection of total failure in economic management.

Reacting to the Budget presentation made on Friday by the Finance Minister, the UPND leader said that it is shocking that the Minister of Finance plans to finance the 2021 budget through borrowing K51.6 billion (US$2.6 billion), representing 43.1 percent of the total budget.

“Of this K51.6 billion, the PF wants to borrow K27.7 billion or $1.4 billion from external sources, an amount equal to total interest payments on external debt and about the size of our reserves, ” Mr Hichilema wrote.

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The national budget that was presented by the Finance Minister Hon. Bwalya Ng’andu, the last of the PF Government, is worrying and a reflection of total failure in economic management. Firstly, the week started with the announcement that Zambia will not only fail to pay the first Eurobond bullet payment due in 2022, but is having challenges in paying the interest owing on Eurobonds up to April 2022, and calling on creditors for a meeting on September 28, 2020, to discuss the Eurobond debt service suspension.

Fair enough, this is a commendable effort to admit that things are not the way they should be, especially if it means we shall soon get on a program to live within our means as a country. Therefore, our creditors and the citizens expected that the budget would address how going forward, the government will be on course to make necessary adjustments to place the country on a path of sustainable debt, and ease the suffering of the Zambian people.

Shockingly, the Minister of Finance plans to finance the 2021 budget through borrowing K51.6 billion (US$2.6 billion), representing 43.1 percent of the total budget. Of this K51.6 billion, the PF wants to borrow K27.7 billion or $1.4 billion from external sources, an amount equal to total interest payments on external debt and about the size of our reserves. What this means is that, on the one hand, PF has hired White & Case LLP, a law firm, and Lazard Freres financial advisory firm, to help negotiate for the restructuring of the debt and suspension of interest payment, while on the other hand, seeking additional debt that will increase the publicly disclosed external debt to $13.4 billion.

Worryingly, the budget is shallow on specific measures to be implemented in areas of identified opportunity envisaged to deliver the recovery; case in point is how the citizens can take advantage of the continental free trade area and the industrial parks. Given the poor track record of the PF administration at the execution level, such lack of details spells doom on the horizon, and prolonged economic uncertainty if this government is given an opportunity to present another national budget.
Our other significant concerns on the 2021 budget are as follows:

1. We are extremely concerned about the planned domestic financing of K17.4 billion, or 15% of the budget, and the consequences of inflation therefrom. With the change in Management at the Central Bank, there is a likelihood of a spike in the money supply, and inflation is very real. Excessive money printing risks bringing the much-dreaded situation of stagflation, in which we have both high inflation and low growth. Zambians need assurances that this will not be the case.
2. Given that domestically generated revenue from Zambia Revenue Authority and other government agencies is a paltry K66.0 billion and yet to pay our public workers and service our debt, we need K74 billion, we have reached the point we feared most as a country. Simply put, we cannot pay our workers and debts without borrowing.
3. Out of the K66.0 billion that will be generated domestically, PF is expecting to raise 5.5 percent or K6.6 billion of the budget through fees and fines – how can you run government expecting to make money charging those who drill boreholes because the government is failing to provide water, hoping your citizens can commit traffic offenses and other misdemeanors?
4. Zambia Revenue Authority will start charging more for imported second hand cars, that they have decided to call high-value motor vehicles. They are back to that old system that they discarded. They have decided to exclude the so-called high-value motor vehicles from the definition of used motor vehicles, and adjust them to ad valorem import duty.
5. While the budget has given K175 per month as a relief to lower-income earners earning K4,000, this cannot cushion the devastating impact inflation and depreciation of the Kwacha has had on the less privileged members of our society.
6. We continue to argue that the PF has wrong priorities. We find it strange that the budget line for health was increased by only 3% in the middle of a deadly pandemic. Adjusted for inflation, the PF has reduced the allocation in real terms. Further, we also note that you set aside K202 million as gratuity for MPs. At the same time, we appreciate that they worked for this money, like many public servants that have not yet obtained their pension. A normal father will not ask his children to tighten their belts while he continues feasting. They can wait for their gratuity. Prioritize paying the outstanding pensions of those public servants who spent over 30 years serving this great nation.

We can point out further shortcomings in the 2021 budget, including the need to close the wastages and leakages through by-elections and corruption, we will leave it here for now. This budget doesn’t attempt to address the challenges our country is facing. We need to go back to the drawing board. Like the way we pointed out way before, that your careless borrowing was unsustainable, we stand ready to provide guidance on the economy to alleviate the suffering placed on our society.

Government has maintained that it will follow the judgment passed in the courts of law over subsidies for chiefs installed after 19th November 2019 unless the constitutional bill number 10 is passed.

Speaking at the burial of the late Chief Sekute? of the Tonga speaking people of Kazungula District, Southern Province Permanent Secretary Mwangala Liomba emphasised that whoever will be installed as the new heir to throne will not have subsidies from Government but be looked after by his or her own subjects.

Mr Liomba said government will only take the responsibility for logistical needs of Chiefs if the constitution bill number 10 of 2019 is enacted by parliament.

He told hundreds of mourners that his office does not expect any new chief to claim payment of subsidies because this is heavily dependent on the proposed amendments to the 2016 constitution which removed the provision for chiefs’ subsidies as responsibility for government.

“For now it is you people here to look after your own chiefs until this matter is solved by the passing of bill 10 in parliament,” he said.

Meanwhile, Southern Province Minister Edify Hamukale has wished the Sekute? family a peaceful transition and selection of a new chief.

Dr Hamukale said succession wrangles are a hindrance to meaningful development in any given society.

He said the people of Sekute? chiefdom should honor the late Chief and emulating his leadership styles of unity and peace which he exhibited during his reign spanning over 38 years on the throne.

“Succession disputes are? a hindrance to development this is why government expects a peaceful transition in the Sekute chiefdom,” Dr Hamukale said.

And speaking on behalf Southern Province chiefs, house of Chiefs member Chieftainess Mwenda appealed to chiefs in the country to revive the culture of writing family trees to avoid succession disputes when a chief dies.

She said old men and women who are custodians of family history should not be sidelined but instead be involved in all matters of chieftainship.

The chief expressed concern of the happenings in Southern Province where a number of chiefdom have been rocked in protracted succession disputes for many years.

“These disputes are a worry to the house of chiefs because? the affected chiefdoms are being robbed of the much needed development and peace”, she said.

Chieftainess Mwenda further called on the Sekute? Chiefdom to consider selecting a new heir who will work with the government of the day like the late Chief did.

Family representative Francis Chika thanked government for the support rendered during the long illness and subsequent funeral of the traditional leader.

The Zambia Chamber of Commerce and Industry (ZACCI) has praised the government for proposing stable regulatory reforms in the 2021 national budget.

ZACCI president Chabuka Kawesha has since advised the government to ensure that there is an active stakeholder participation in the policy, regulatory and structural reforms process that will be undertaken.

In an interview after the presentation of the 2021 national budget at parliament yesterday, Mr Kawesha explained that there is need for the government to involve the private sectors in issues that are key to the country’s development agenda such as the policy and regulatory reforms.

“Managing the issue of debt and recouping of major infrastructure projects government must realise that the private sector Is available to undertake some of these projects hence the emphasis on the policy and regulatory and reforms that is very key and that area must allow the private sector to get greater involvement,” he said.

On industrialization, Mr Kawesha observed that government should suspend or scrap off the investment threshold for Zambian citizens to qualify for tax incentives under the Zambia Development Agency (ZDA) Act Number 11 of 2006.

Government has in the 2021 national budget proposed to reduce the incentive from US$ 500,000 to US$ 100,000 from those intending to operate in a priority sector such as multi facility economic zones or industrial parks.

But he explained that the proposed incentive is still high for ordinary Zambians to be encouraged to invest in such economic ventures.

“In terms of industrialization and access to MFEZ US$ 100,000 is still high, I think the government should have just waved it out to probably scrap it and then take other measures other than fiscal ones to allow the local manufacturers to take up the incentive, “Mr Kawesha explained.

He further added that many local manufacturers have failed to venture into serious business on account of restrictions due to fiscal measures that have been put in place.

Minister of Finance Bwalya Ng’andu during the presentation of the 2021 national budget announced that government will undertake reforms in the areas of domestic resource mobilization, debt management and public procurement among others.

“Mr Speaker, achieving economic recovery and building resilience to safeguard livelihoods and protect the vulnerable, especially in the wake of the COVID-19 pandemic, requires us to undertake policy, regulatory and structural reforms,” he said.

And Dr Ng’andu said government is promoting the procurement of locally produced goods to enhance the market opportunities for the local industry in order to support industrialization.

He also cited the construction of industrial yards across the country as an initiative that will further promote industrialization and create at least 4,000 employment opportunities.

He also called upon the private sector to take advantage of the Africa Continental Free Trade Area Agreement which comes into effect in 2021 and expand their business and market base.

“With the coming into force of the Africa Continental Free Trade Area Agreement in 2021, Zambia will reposition herself to take advantage of the expanded market to the rest of Africa. Let me urge the private sector to harness the opportunity of the agreement to grow their business and access the market, “he noted.