Zambia: The 2020 Budget will not achieve anything tangible – Musokotwane

Zambia President Edgar Lungu

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.