Maravi

No relief for workers

No relief for workers
Written by Editor

With some flair, finance minister Situmbeko Musokotwane yesterday presented his first budget speech. Yet again, we have a budget theme with the words “growth, competitiveness and diversification”.

Despite continued failure of the government to fully implement structural reforms, which had begun in 1992, they will try again in 2009 to “promote diversification and enhance national competitiveness through structural reforms, and development emphasis will be placed on agriculture, tourism, infrastructure and manufacturing development”.

Curiously, there is no mention as to what has led to the continued failure over the years to reform nor does the speech indicate how and when. The major themes are the same ones that have been pronounced for many years and once again, the czars at the Ministry of Finance have shown that they are slowly improving in crafting the same sentences in different formats.

On competitiveness, Musokotwane says the government will “step up” regulatory reform. How and when is not answered. Whilst the Private Sector Development Initiative under the Ministry of Commerce, Trade and Industry has stalled and little is being done, these reforms are not only about business licensing. It goes far beyond this and it is multi-sectoral.

On infrastructure development, the government will introduce a Bill to provide a legal framework for Public Private Partnership, which is good but not adequate. On decentralisation, the government, again, says they are committed and, therefore, will this year develop a local government capacity-building programme and that they will work towards adopting the Decentralisation Implementation Plan.

Those who have kept their budget speeches for the past few years will notice that it’s the same thing said over and over again, albeit differently at times and therefore such objectives are rendered meaningless. So much for structural reforms!

The late prime minister of Britain, the Rt Hon Disraeli in 1862 said in the House of Commons:

“I have so often maintained it in this House that I am almost ashamed to repeat it, but unfortunately it is not a principle which has yet entered into Cabinet opinion - expenditure depends on policy and policy is developed through consultations.”

In 2008, there was a deficit of K1, 394.3 billion that was financed through domestic borrowing of K811.6 billion and foreign financing of K582.7 billion. From the new mining taxes, K917.3 billion was expected to be collected, instead only K319.5 billion was collected. The 2009 budget will spend K15, 279 billion, about 25.4 per cent of Gross Domestic Product (GDP). Of this, K10, 645.9 billion (69.7 per cent) will be financed from domestic revenue and the balance K2, 768.7 billion (18.1 per cent) will come from donors as grants, and K1, 069 billion (1.8 per cent) of GDP will be financed through domestic borrowing and further external borrowing of K795.5 billion.

On expenditure for 2009, General Public Service will consume 31.8 per cent, Defence seven per cent, economic affairs 19.8 per cent, environment protection 0.8 per cent, housing and community amenities 3.8 per cent, health 11.9 per cent, recreation and culture 1.2 per cent, education 17.2 per cent, social protection 2.5 per cent of the total budget allocation of K15, 279 billion. The 2009 sector policies on agriculture will see an allocation increase of 37 per cent or K1, 096.3 billion, of which K435 billion will go to the Fertiliser Support Programme (FSP).

Musokotwane says the government is “concerned that FSP has had limited impact on increasing agricultural productivity”, so they will this year initiate “a comprehensive review of the FSP”.

On infrastructure, the government will yet again try to complete the development of the Nansanga Farm Bloc, which is expected to be ten times bigger than the Nakambala Sugar Estates.

On tourism, money will be spent on improving roads and refunding "certain" expenditures incurred in shooting movies that will promote Zambia.

On manufacturing, the government will promote Multi-Facility Economic Zones (MFEZ). To encourage value addition in the cotton sector, cotton income tax rate on profits from exports of cotton will increase from 15 per cent to 35 per cent. Customs duties on several products will be reclassified with a view to assisting local manufacturers and encouraging investment. Further tax incentives are being provided for MFEZ.

However, this still leaves unanswered the question on local industries that are not in the MFEZ, who are not being provided with any relief. On energy, electricity tariffs will continue rising. On transport and communications, the license fees for the International Gateway will be substantially reduced.

On the mining sector, windfall taxes will be removed and generally provide relief through customs duties by K19.3 billion. The Pay As You Earn (PAYE) relief is totally insignificant and the excuse given is that “the government would have wished to provide greater relief to workers this year, but is constrained by the prevailing economic environment”.

This is not correct. We say this because no attempt has been made by the government to cut down costs within itself. Probably, this is why the government is constrained in providing relief to the Zambian worker.

We will, in the course of next few days, examine the detailed expenditure of all ministries to see how constrained they really are and how much of the perennial wastage has been continued. The devil is in the detail, the Yellow Book, and we will examine the 1,645 pages of the “Yellow Book” and all the proposed budgetary legislation that will be tabled in Parliament in the next few weeks, which will provide clarity and intent of what we can expect in 2009.

Labels: 2009 BUDGET, SITUMBEKO MUSOKOTWANE

posted by MrK @ 11:10 AM