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2020 budget – absurd priorities

Finance minister Dr Bwalya Ng’andu came into office in a time of crisis. You can’t tell that from the Budget speech that he gave on Friday. Ordinarily, you might give a new finance minister a pass on his first budget. But these are not ordinary times for Zambia, and if we do not face our challenges, and only try stumbling forward, our nation’s future will be at risk and citizens will unnecessarily suffer.

The Medium Term Expenditure Framework (MTEF) 2019 – 2021 and the Budget 2020 sets out the economic context for the government’s financial operations, identifies priorities, describes the policies and actions that will be carried out to achieve them, and explains their expected impact. It makes sad reading. The 2020 Budget is not about the new mantra of “managing for results by doing more with less” it’s about misplaced priorities.

Finding a ‘sacrificial lamb’ to whom to tag blame (climate change) for complicated problems is an important toolkit of the PF politicians because it deflects blame for the nation’s economic woes away from their own economic mismanagement. You cannot solve a crisis that is borne as a symptom of mismanagement in one budget speech. It will involve significant sacrifices and pain, and there are serious doubts that the PF is ready to face the music. Facts do not cease to exist because they are ignored.

The economic context noted in the budget speech is Zambia’s deteriorating economic performance. GDP growth has dropped as a result of declining copper production, a major drought, and corruption. The massive increase in government debt has resulted in the government not being able to pay its bills, leading to the accumulation of K20 billion in arrears. During the first 7 months of 2019, US$871 million was spent on external debt service – a 28 per cent increase from last year – and the Bank of Zambia purchase of US$387 million in foreign exchange from the market to keep reserves from crashing contributed to the Kwacha depreciating from K11.9 to a dollar at end-2018, to over K13.2 today, and inflation is rising. The priorities set out in the budget speech; creating fiscal space, ensuring debt sustainability and dismantling domestic arrears, do not address the many crises that we are facing.
Climate change is causing suffering now, with worse still to come. United Nations data indicate that 1.7 million Zambians in and parts of Lusaka, Eastern and Central provinces are facing a food crisis or emergency. That number is projected to grow to 2.3 million by next March. To mitigate this finance minister has allocated for food security pack and public welfare assistance K122,162,992 (about $9.2 million).

For all the noise the President and the finance minister have made on climate change, the 2020 budget has allocated K611,777,853 (about $46 million) to mitigate climate change, as to how, we don’t know. Further, the inconsistent policies in copper mining are putting the jobs of miners and those working for companies that supply the mines at risk, as well as enhanced revenue for government. The budget doesn’t adequately provide for immediate action to address any of these and other predicaments.

Instead, during peace time, climate change, load shedding, drought, debt, belt tightening, Dr Ng’andu has shockingly allocated to 6.2 per cent share of the budget K6,526,391,423 (about$494 million) for Defence, to which he said on his ZNBC Sunday interview that defence equipment has become obsolete hence the need to allocate the said sum and that from 2021 onwards the amount would decrease. The Ministry of Finance’s MTEF 2019-2021 shows that in 2021 the spending on Defence would be 5.3 per cent of the share of the budget. But this reckless spending in time of economic crisis is morally and economically wrong. Dr Ng’andu seems to be under internal political pressure to have accepted this reckless defence spending.

He has allocated K143,725,597 (about $10.88 million) for Public Affairs and Summit meetings. Whilst allocating K900,622.173 (about $68.22 million) for drugs and medical supplies, and K686,266,173 (about $51.98 million) for hospital operations.

This is how absurd the priorities are. It is outrageous. The Yellow Book, once published will probably reveal further misplaced priorities in an era of so-called belt tightening and doing more with less.

As for other priorities, while the budget provides small increased spending for education, health and economic affairs, it is a wish list, and cannot possibly work. The last budget was based on a projected K60 billion in domestic revenue and financing, and authorised K72 billion in spending, could not be implemented without accumulating payments arrears. So, why would the 2020 budget be any different?

Without a major debt rescheduling from foreign lenders, or an unprecedented increase in grant income, the budget will remain perilous. The future under this 2020 budget looks like more of the same; frivolous spending, misplaced priorities, accumulating arrears, depreciating Kwacha and accelerating inflation.

In his concluding remarks, Dr Ng’andu says, “Corruption is against our core national values and will not be condoned” while Edgar Lungu told Parliament that: “I will not relent on the fight against corruption; I will not stand and see greedy citizens destroy the good fibre of our nation.”

This is rich, when Edgar has a penchant for the dodgier end of his friendship circle.

Wes Fesler once said, “Hypocrisy is the audacity to preach integrity from a den of corruption”.

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