THE 2020 Budget is mute on how to seriously address the debt crisis that has engulfed our nation, says the UPND.
Giving a preliminary overview reaction to the budget proposals presented last Friday by finance minister Dr Bwalya Ng’andu, Dr Situmbeko Musokotwane, chairman of the UPND economics and finance team, said it was clear from the 2020 budget that the PF government had completely abandoned the fiscal consolidation stance that it announced in 2017 under a programme entitled “Zambia Plus” but which it did not respect in the subsequent budgets in 2018 and 2019.
“Secondly, 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 organisations such as the IMF and the World Bank,” the former finance minister said. “Thirdly, 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 said the 2020 Budget would not achieve anything tangible because it was a budget for merely paying public service workers’ salaries and servicing national debt.
“There is no money for anything else that matters to the ordinary citizen,” he said.
Citing the PF government’s proposal to raise K106.01 billion through tax revenues (K53.77 billion), non-tax revenues (K17.71 billion) and financing or borrowing (K34.08 billion), Dr Musokotwane said expenditure on wages and salaries (personal emoluments) would at minimum be K25.60 billion (estimated since no details were given in the budget address), debt payment (interest and amortization) would 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) would amount to K7.34 billion while the foreign financed expenditure (K30.62 billion) is project support, which would be specifically for the projects for which the money would be borrowed.
“The government has no discretion on the above expenditure. They must be paid. They are non-discretionary,” Dr Musokotwane said. “If we add other politically sensitive expenditures, which are FISP [Farmer Input Support Programme] (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. 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.”
Dr Musokotwane said if 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 was taken into consideration, would mean a budget overrun.
“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,” he noted. “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?”
Dr Musokotwane said the 2020 budget would not deliver the intended results.
“It 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,” he said.
“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.”
Dr Musokotwane said government departments would continue to be underfunded.
“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,” said Dr Musokotwane. “Sadly, the 2020 budget is mute on how to seriously address this major crisis that has engulfed our nation.”