Economic downturn bites as national treasury receives nine per cent below projected income - PS

Thursday, June 18, 2009

Economic downturn bites as national treasury receives nine per cent below projected income - PS

Economic downturn bites as national treasury receives nine per cent below projected income - PS
Written by Kabanda Chulu
Thursday, June 18, 2009 3:21:38 PM

THE national treasury has registered only K3.75 trillion in tax receipts in the last five months which is nine per cent below projected income under the current economic downturn, finance ministry permanent secretary for Budgets Emmanuel Ngulube has said.

Ngulube yesterday told the parliamentary committee on Economic and Labour Affairs that the current economic situation is bad and not something that Zambia will resolve immediately.

Responding to Chiengi MP Kalumba Katele, who asked if government might consider revising the current budget and bringing a mid-term budget to parliament in the event that revenue collections do not improve, Ngulube said if government exceeds the borrowing limit of 1.8 per cent of Gross Domestic Product (GDP), various options would be considered.

“On meeting economic targets for this year, the picture will emerge in the last quarter but the economic situation is bad, it is not something that we can get over it immediately especially that it is being projected that the global economy will see recovery in 2010 due to those measures (stimulus packages) being done by developed countries to boost confidence to result in economic growth,” Ngulube said.

“So depending on the pace we are moving, we may attain the targets or not and due to various circumstances we may consider many options including seeking parliamentary approval to revise budget, it has been done before and we can still do it but we remain hopeful that things will change and also copper prices will rebound in the next quarters.”

And Ngulube said the main channel through which the fiscal policy had been affected was through the impact on revenues.

“Value added taxes, customs and excise duties have significantly underperformed, by 14.9 per cent, 20 per cent and 33.1 per cent respectively and these underperformances are mainly the result of the crisis and its effects in the mining sector and on domestic demand,” Ngulube said. “Tax receipts to the treasury during the first five months of 2009 stood at K3.75 trillion, which is below projections. In addition, direct budget support from donors is 49.7 per cent below projections for the period January to May 2009.”

He said in response to the weaker outlook for revenues, government has had to realign its resources to ensure priority expenditures (infrastructure and social sectors) were safeguarded.

“Non-priority expenditure have either been reduced or eliminated since these revenue shortfalls have presented challenges to the budget implementation in 2009 as a result of funding delays,” said Ngulube. “This has led to expenditure being severely constrained, between January and May 2009, domestically financed expenditures were 10 per cent lower than planned on account of funding delays.”

Labels: EMMANUEL NGULUBE, GREAT DEPRESSION II, KALUMBA KATELE