(SUNDAY MAIL ZW) ‘Budget spells death of old economy’
Sunday, 22 December 2013 00:00
Sunday Mail Reporter
MDC-T leader Mr Morgan Tsvangirai, under pressure from some Western diplomats, is frantically trying to convince some senior party members to gang up against secretary-general Mr Tendai Biti following his decision to agree to represent the former Governor of the Reserve Bank, Dr Gideon Gono, in a constitutional case filed by Dr Munyaradzi Kereke.
About two weeks ago, Dr Kereke filed a constitutional application citing the Zimbabwe Anti-Corruption Commission as the first respondent and Dr Gono as the second respondent in a case in which he is accusing the Commission of acting unconstitutionally by allegedly failing to probe allegations of abuse of office, corruption and theft against Dr Gono.
Following the filing of the case, Dr Gono, who is the Zanu-PF Senator-elect for Buhera, last week engaged lawyer Mr Biti to fight the allegations levelled against him by Dr Kereke, a move that has not been well received by some Western diplomats who would have preferred to see the MDC-T using the former RBZ boss to tarnish the image of Zanu-PF.
The MDC-T was founded and is funded by the British government together with the US administration. As a result, Western diplomats in the country play a key role in the affairs of the MDC-T.
It is understood that the pressure from the diplomats added to Mr Tsvangirai’s fury as he already had been angered by the decision that was taken by his subordinate without first making consultations with the party’s leadership.
Reports say an infuriated Mr Tsvangirai over the past few days has been making frantic calls to some senior party members, including Mr Douglas Mwonzora, Mr Chamisa, Ms Thokozani Khupe and Mr Lovemore Moyo, trying to convince them to condemn Mr Biti’s decision to defend Dr Gono in court.
Mr Tsvangirai is said to be arguing that while legally Mr Biti as a lawyer can represent any client of his choice, from a political point of view, the move was ill-timed and ill-advised.
MDC-T spokesperson Mr Mwonzora confirmed that indeed he had discussed the issue about Mr Biti representing Dr Gono with Mr Tsvangirai after it had been reported in the Press. Party organising secretary Mr Nelson Chamisa would neither deny nor confirm the tiff, referring all questions to Mr Luke Tamborinyoka, who is Mr Tsvangirai’s spokesperson.
Added Mr Chamisa: “It is better for Luke Tamborinyoka to comment on the issue.” Although Mr Tamborinyoka was not reachable yesterday, highly placed MDC-T sources privy to the ongoing power wrangles within the party, which is still smarting from an embarrassing thrashing during the July 31 harmonised elections, insist that Mr Tsvangirai is calling for Mr Biti to be held to account.
“Soon after the news broke out that Mr Biti would be representing Gono, there was a lot of traffic from some Western diplomats calling our leader expressing reservations over the move by the secretary- general which the majority view as ill-timed and ill-advised. However, even before the calls from these diplomats, Mr Tsvangirai was already livid at the decision.
He was furious that Biti took the decision without even consulting the party leadership despite the political undertones and overtones that will be brought about by this case.
“Mr Tsvangirai was asking why Biti was creating problems for the party. Although this is a constitutional case, from our standpoint this is a political case and we can’t just be too simplistic about it, considering that Biti is our secretary-general. The least Biti could have done is to consult the leadership rather than acting as a lone ranger. He should have taken advice on the political implications of this case,” said one top MDC-T official who refused to be named for fear of victimisation.
A prominent constitutional lawyer based in Harare who refused to be named for professional reasons said: “It’s Dr Gono’s right to chose a lawyer of his choice and it’s fine for my learned friend Biti to choose any client of his and I actually wish Biti the best. He is a good lawyer.
“However, after so many years in Government and away from practice, I think Biti may be rusty and he has his work cut out because he is going to have to punch above his weight in each round.
“Remember also that my learned friend in the past handled mainly criminal cases and this constitutional case may present some challenges. The criminal court is different from the constitutional court where he is going to come before a full bench of nine judges. It’s possible that Mr Biti might opt to instruct other advocates to handle this matter for him.
“Like I told you, Mr Biti is a good lawyer, but I think on this one, he is acting like a bantamweight boxer trying to go for the heavyweight division. Let’s see how things turn out.” Another lawyer, however, said the legal fraternity in Zimbabwe was a very “thin market” where specialising in one area is not common “so Biti should be able to find his way” in handling this constitutional case.
Efforts to get a comment from Mr Biti proved fruitless as he was unreachable on cellphone. However, he told the media last week that it was his right to choose clients of his choice.
Labels: BUDGET, MDC, MORGAN TSVANGIRAI, MUNYARADZI KEREKE, TENDAI BITI
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Chilufya calls for more effort in diversifying agriculture
By Abel Mboozi
Tue 05 Nov. 2013, 14:00 CAT
THE government should stick to planned activities and avoid unwarranted expenses if it to meet the 6.6 per cent budget deficit target in 2014, says UPND Bweengwa member of parliament Highvie Hamududu.
Hamududu who chaired the committee on estimates said the unprecedented 8.5 deficit of the Gross Domestic Product for this fiscal year was unacceptable and was mainly caused because of high unplanned for expenditure.
Hamududu said fiscal indiscipline by the government should be stopped because it entailed that the state spent more than it planned.
"If government continues implementing unplanned for policies and projects, then Zambia will continue having budget deficits and we might not achieve the target of reducing it to 6.6 per cent next year. The government should learn from this year's experience and correct things," Hamududu said.
He cited the funding to unbudgeted for new districts as well as the establishment of new universities that had contributed to the high budget deficit for this year.
"The frequent changes of PSs, where they are appointed and removed, these officers go away with benefits. The recalling of officers in foreign service as well their replacements too is another costly venture as there is repatriation expenses involved," he said.
"Ideally, before such measures are undertaken, government is supposed to budget for them, but this was not the case. The government should at all times consider the budget implication whenever it wishes to undertake such measures."
He said the creation of new districts should have been a well planned exercise that should have been undertaken in phases.
"Instead, these districts were announced, and DCs appointed and that was not planned for in the 2013 national budget and so, the key point is that we are telling the government to plan for unplanned expenditures by factoring them into the national budget," he said.
Hamududu said any new project the government wished to undertake should be slotted in the national budget.
On external debt, Hamududu said the rise in the debt stock was extremely worrying and if not checked, it could plunge Zambia into another foreign debt trap.
"The foreign debt currently stands at U$3. 1 billion which is unprecedented because when there was a debt write-off in 2005, it was way below U$1 billion, but within a period of seven years it has risen so high and our fear is that we could fall into another debt trap," he said.
Hamududu said even if the debt at the moment was still sustainable looking at the size of the economy, at the rate the debt was increasing was worrisome; more so that there were indications by the state to borrow another U$2 billion.
"This therefore means that by end of next year, our foreign debt could stand at U$5 billion plus which is not correct," he said.
And Hamududu said many stakeholders that appeared before his committee, including finance minister Alexander Chikwanda expressed concern that Zambia was not reaping much from its mineral wealth.
"In fact, Mr Chikwanda himself said Zambia was getting about five per cent in form of revenues from the mines when in SADC generally, the mines contributed about 11 per cent and so, we are quite below what mining houses in the region are contributing," said Hamududu.
"Clearly we are way below examples in the region. Other mine houses in the SADC region pay more and so Zambia is under taxing the mines.
Labels: ALEXANDER CHIKWANDA, BUDGET, DEBT, HIGHVIE HAMUDUDU, TAX EVASION
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Chikwanda unveils K42bn national budget
By Chiwoyu Sinyangwe and Gift Chanda
Fri 11 Oct. 2013, 14:01 CAT
FINANCE minister Alexander Chikwanda is today expected to unveil an estimated K42 billion 2014 national budget. Next year's national budget is a K10 billion increase from the 2013 budget.
Zambia's budget for 2013 was K32.2 billion although pressure from subsidies on fuel which were halted last April and huge salary hike for civil servants last September saw the country's fiscal deficit stressed to 8.5 per cent of the country's gross domestic product, the highest in the post-HIPC period.
According to sources within Treasury, some of the salient sources of finance for Zambia next year will include income tax as well as customs and excise duty at about K15 billion.
The sources said salaries for civil servants have jumped by 50 per cent from this year's projection to K15. 3 billion next year while non-personal emolument programmes had slightly increased from K18.5 billion this year to K22.6 billion next year.
Next year, constitutional and statutory expenditure is provided at K4.7 billion from K3 billion this year.
The government plans to borrow K3.5 billion from local sources and about K10 billion from international financial institutions and other lenders.
In 2012, government successfully issued a US$750 million eurobond and is currently negotiating with Citibank and Standard Chartered for a US$250 million syndicated loan, a bulk of which will go into the road sector where President Sata has launched an ambitious plan to build 8,000 kilometres.
Chikwanda today presents the 2014 national budget at the time key macroeconomic indicators do not appear healthy on the backdrop of uncertainty in key global economies, with copper prices subdued while the agriculture sector is recovering from a combination of poor rainfall and chaotic input distribution.
Zambia's economic growth for 2013 is expected to shrink to six per cent from the targeted seven per cent due to declining copper prices and sluggish performance of the agriculture sector.
The economic growth is, however, expected to pick up to 7.5 per cent between 2014 and 2016.
Secretary to the Treasury Fredson Yamba revealed last month that next year's budget would focus on reducing government expenditure as a way of containing rising fiscal deficit.
"We agreed on measures to reduce the deficit as we move forward in the medium term," Yamba told journalists when an inspectorate team from the "International Monetary Fund) visited Zambia last month.
"This entails that we need to tighten our expenditures and also reduce our borrowing and at the same time, we need to broaden the tax base. That is the only way you can reduce the deficit. So, on the revenue side, you broaden your tax base and then you look at the expenditure side and tighten it."
Since the Patriotic Front government came into power in 2011, the workers in the country have enjoyed an exponential increase in the threshold for Pay As You Earn.
But with the weakening revenue capacity of the government vis-à-vis its increasing expenditure, especially in infrastructure, the government is unlikely to extend, further, tax generosity to workers.
Copper prices have remained sluggish in the larger part of 2013, and government's modest projected increase of K2.185 billion in mineral royalty tax next year from K1.890 billion this year indicate there will be no major changes in mine taxes.
The government had this year planned to create 200,000 decent jobs and as Chikwanda presents the national budget, Zambians would be looking out for a report of the actualised jobs.
The biggest paradox Chikwanda faces as he presents the 2014 national budget is to show how the government will cut back on expenditure without disturbing key social and economic programmes in health, education and infrastructure projects like roads and power stations.
"Just after being in power for two years, you are already constraining your budget," said former finance minister Ng'andu Magande.
"The first budget the PF presented, they said it was for Rupiah Banda; the second one was theirs. Now the third budget, they are talking about regressing… it is like we are going backwards. This year's deficit can only be dealt with by reducing your borrowings next year. If next year they are restraining the budget, how are they going to finish all the road projects they have started? I accept what Mr Yamba said that we have to constrain the budget next year. But what is going to happen to these roads they have started? It means the projects have to be abandoned."
Labels: ALEXANDER CHIKWANDA, BUDGET
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Sata dismisses budget collapse rumours
By Moses Kuwema
Mon 24 June 2013, 14:01 CAT
PRESIDENT Michael Sata has dismissed assertions that the Patriotic Front government's national budget has collapsed.
In a statement by his special assistant for press and public relations George Chellah, President Sata yesterday described such claims as premature, unwarranted and mischievous.
"Our foreign reserves currently stand at about US$2.4 billion while the country has recorded over US$2 billion in investment pledges in various sectors of the economy in the first quarter of 2013," President Sata stated.
"Similarly, non-traditional exports grew to US$530.7 million in the quarter of 2013, compared with US$500.9 million recorded during the same period in 2012. It is therefore, irresponsible to engage in extreme talk amidst such a robust national economic performance."
President Sata stated that in line with the PF manifesto's commitment of promoting inclusive growth and social justice for all, the government was running an activity based budget and had continued financing projects and programmes judiciously.
"The focus of the 2013 budget is to facilitate accelerated and sustained economic growth that translates into tangible realities for our people such as generation of sufficient and stable jobs, a redistribution of income and opportunities in favour of the poor, access to basic services and a general improvement in the standards of living," President Sata stated.
"Consequently, we have made substantial allocations towards the health, education, water and sanitation and local government sectors. Other interventions have been targeted towards facilitating sustained growth in the agriculture, tourism, infrastructure development and manufacturing sectors. In order to guarantee the execution of pragrammes and activities, the President has directed the Treasury to ensure that programme implementation reports are submitted by Ministries, Provinces and other Spending Agencies (MPSAs) prior to receiving subsequent funding."
President Sata stated the PF government was working tirelessly and with greater urgency to ensure that all priority sectors of the economy flourish within the projected benchmarks.
Meanwhile, President Sata has dismissed reports that he intends to substitute finance minister Alexander Bwalya Chikwanda with a named former finance minister, describing the reports as cheap careless gossip.
Labels: BUDGET, MICHAEL SATA
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Panos calls for engagement of the poor in budget tracking
By Misheck Wangwe in Kitwe
Mon 12 Nov. 2012, 10:00 CAT
PANOS Institute Southern Africa says engaging the poor in national budget tracking and implementation will significantly enhance accountability of national resources.
In an interview, Panos Institute Southern Africa (PSAf) executive director Lilian Chigona said the engagement of the poor in tracking the national budget implementation in communities was critical to fostering meaningful economic development.
She said without a deliberate effort to engage the poor and marginalised in society in budget tracking, the poor would remain sidelined with no platform for engagement.
"Local communities have an important role to play in the budgeting process at various levels and in tracking the use of resources allocated for them in the budget, but they can only do so if they have platforms for expressing views. When a budget is passed, community members need to be empowered with adequate information and skills to understand what has been allocated to them and for what use so that they can actively participate in fostering accountability of public resources," Chigona said.
She said communities could effectively monitor the use of their resources if they know what had been allocated to them.
"It's not adequate to get community voices of before budgets are approved so that they advocate for certain issues, and then leave them out when budgets are being implemented," Chigona said.
She, however, said it was gratifying that Zambia, like any other developing country, was striving to improve its governance systems and structures and had developed several programmes aimed at promoting efficient and effective use of public resources across all sectors.
Chigona said it was not enough to talk about citizen engagement without deliberately making efforts to empower people to participate in resource tracking and other governance processes.
"Unless people have access to quality information and have a platform for engagement, this will remain a dream. As PSAf, we believe that since the targeted beneficiaries for all these public resources allocated to various departments at community level are communities, it is only right that they should be empowered to actively monitor and track the flow of budget implementation," said Chigona.
Labels: BUDGET, CORRUPTION, LILIAN CHIGONA, PANOS
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It's a development budget - Kwesiga
By Mwala Kalaluka
Sun 14 Oct. 2012, 14:30 CAT
AFRICA Development Bank country representative Freddie Kwesiga has hailed Zambia's 2013 national budget presented last Friday as a development budget saying 'this is the way to go'.
And former Republican vice-president Enoch Kavindele says the 2013 budget is an excellent one and will get the country to a good start.From front page
Meanwhile, Auditor General Anna Chifungula says the 2013 budget is a plus.
In an interview shortly after finance minister Alexander Chikwanda delivered the K32.2 trillion 2013 budget speech at Parliament on Friday afternoon, Dr Kwesiga said he liked the manner Chikwanda presented the core areas of the budget, sector by sector.
"What else did you expect? I think for me this is a development budget," said Dr Kwesiga. "This is the way to go."
He said that the 2013 budget had given very good impetus in areas where the government is spending its resources.
Kavindele said that the PF's maiden budget had gone beyond expectation.
"We are on to a good start. Everything has just gone very correct," said Kavindele.
When asked if the 2013 national budget was indicative of the country's departure from donor dependence, US Ambassador to Zambia Mark Storella said he could only comment after studying the document.
"I have to study it," said Ambassador Storella as he walked out of the Parliament building from the VIP gallery where he had been following Chikwanda's budget presentation with other diplomats.
During presentation of the budget in the House, Chikwanda said President Michael Sata had gotten the country to a good start.
"Unlike what we saw in the not so distant past," Chikwanda said, "let us join the President in getting Zambia moving at full-throttle."
Chikwanda said in his concluding remarks that those that stage a claim of leadership need to set a moral benchmark and embrace accommodation and tolerance.
"For the opposite is not an option but a recipe for doom," said Chikwanda as opposition members of parliament shouted: "Doom, Doom."
Kick-starting the parliamentarians' debate on next year's budget, Bangweulu PF member of parliament Chifita Matafwali described it as an antidote.
"It is always joyous to be associated with a momentous occasion," said Matafwali as opposition members of parliament urged him to take it easy.
"Today's event, on this 12th day of October in the year of the Lord 2012 is an historical and indeed momentous day. It is indeed the first PF moulded budget."
Zesco managing director Cyprian Chitundu said that the money the government had directed to the energy sector in the 2013 budget showed that it wants to do things differently.
"The energy sector has lacked investment for a number of years and we are late," Chitundu said. "Kafue Lower Power Station should have been done 18 years ago. Itezhi-tezhi should have been done 10 years ago. Now we are doing these projects."
Chitundu said the country's energy sector could not continue talking about the glory that was created by first Republican president Dr Kenneth Kaunda.
"This government is saying let us do things differently," said Chitundu. "Once we have constant power supply, the cost of doing business will be lower...and we are very happy with the money that has been given to us. What we have to do now is to start performing."
Meanwhile, Chifungula said the 2013 budget was a plus because it was growth-oriented but she insisted that her office had to be given a higher role in ensuring that there was prudent management of resources in view of the fact that K32.2 trillion was a lot of money.
"Even when you look at the way they are going to spend the Euro Bond, they are looking at energy, road and infrastructure," Chifungula said. "There is nowhere where it will go to consumption at all. It is development."
Outlining the manner in which the recently-acquired US$750 million Eurobond would be expended, Chikwanda said US$255 million would go to the energy sector, US$430 million would be spent in the transport and road sector, US$20 million would go to the Development Bank of Zambia DBZ for the small and medium enterprises, US$29 million on human capital on access to finance while US$1.4 million would go to fees and transaction costs among other disbursements.
"No room for speculation," said Chikwanda.
However, Chifungula said with the increased funding that had been allocated to the Anti-Corruption Commission ACC and Drug Enforcement Commission DEC( over K100 billion), these institutions would now have no excuses in acting on her reports.
"These increased funding are pluses. It is long overdue," Chifungula said. "With this kind of money which is coming to spending agencies, there will be need, especially for our office, to take a higher role. K32.2 trillion is a lot of money."
On the government's decision to delegate the Zambia Public Procurement Authority ZPPA from active involvement in public procurement to an overseer and regulatory role, Chifungula said that was also a positive move.
"That is how it is in most countries. The public procurement is supposed to play an oversight role to see that procedures are being followed," said Chifungula. "They will now have more time to carry out inspections in the spending agencies."
Labels: 2013 BUDGET (ZM), ALEXANDER CHIKWANDA, ANNA CHIFUNGULA, BUDGET, ENOCH KAVINDELE, FREDDIE KWESIGA
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COMMENT - More games from the neoliberal MDC.
No joy for civil servants as Biti slashes budget 10pc
Thursday, 19 July 2012 00:00
Business Reporters
THERE is no hope for civil servants salary increment this year as Finance Minister Tendai Biti yesterday slashed the 2012 National Budget by about 10 percent to US$3,64 billion, citing poor revenue inflows.
The civil servants had given the Government up to the end of this month to review their pay or risk devastating strike. Presenting his Mid-Term Fiscal Policy Statement in Parliament yesterday, Minister Biti said Government missed its revenue target by US$244 million by end of June with a large chunk being
shortfalls on diamond dividends of US$229,3 million.
The economic growth forecast was also revised from 9,4 percent to 5,6 percent due to revenue shortfalls and poor performance of agriculture.
The wage bill consumed 70 percent of its original US$1,073 billion budget allocation.
Total expenditure for the six months to June amounted to US$1,565 billion.
“Indeed, even in the absence of such reviews, Government faces the real danger of defaulting on salary payments. Hence, we need not take the current monthly payments for granted but seriously appreciate the limited fiscal space for wage adjustments,” Minister Biti said.
Agriculture, that was initially expected to register 11,6 percent growth, is now expected to decline to minus 5,8 percent. Poor harvests were characterised by the late onset and erratic rainfall and long dry spells from the end of December 2011.
Mining will, however, grow to 16,7 percent from an initial forecast of 15,9 percent.
“Contrary to our 2012 gross domestic product growth projections of 9,4 percent, indications are that the economy will shed almost 4 percentage points to grow by only 5,6 percent, which also falls short of the Medium Term Plan annual average target of 7,1 percent,” said Minister Biti.
The outlook is, however, not totally bleak as inflation will remain within target.
The anticipated weakening of the South African rand against the United States dollar and softening in international fuel prices would stabilise inflation.
To enhance revenue inflows, Minister Biti proposed to increase customs duty on flour imports from 5 percent to 20 percent to promote the local milling industry and manufacture of stockfeeds.
He also proposed to raise excise duty on diesel and petrol from 16 and 20 cents per litre to 20 and 25 cents per litre, respectively, with effect from August 1.
“This measure is expected to raise additional revenue of about US$20 million,” he said.
However, the increase in the excise duty rate should not translate into higher prices of diesel and petrol in view of the decline in the price of crude oil from US$124 per barrel in April 2012 to US$101 per barrel as at 13 July.
Government will also sell some of its shareholding in major companies.
Total exports for the period January to June 2012 rose by 45 percent to US$1,6 billion from US$1,1 billion realised in the same period last week. Mineral exports
accounted for the bulk at 73 percent.
Minister Biti said imports have continued to grow much faster, reflecting increased demand for equipment and raw materials for resuscitating industries.
He said mining fees would be reviewed to promote investment and growth.
In preparation of the next farming season and beyond, farmers, with the support of Government, the banking sector, promoters of contract farming and development partners would need to mobilise resources.
This would be within the context of the Comprehensive Agriculture Policy, which puts annual financial requirements for agriculture at US$2,4 billion.
“However, given the under-performance of the budget during the first half of the year and the anticipated lower revenues during the last half of the year, a larger role of other parties — the farmers themselves, the banking sector and development partners — will be required,” said the minister.
He said issues that needed to be urgently addressed to aid economic recovery were the country’s politics, attracting foreign direct investment, leases and restoration of markets as well as the perennial power shortages.
Minister Biti said the Zimbabwe Investment Authority would soon be aligned with the Indigenisation and Empowerment Regulations to address investors’ concerns to enable the country to attract meaningful investment into the country without undermining the empowerment initiatives.
In the six months to June, domestic debt and arrears by Government ministries to service providers continued to rise, further compromising service delivery.
Debts and arrears reached US$179 million by end of June, way above the budgeted US$51,4 million.
To reduce local authorities and inter-parastatal net indebtedness, clearance of arrears to these entities will be directed to the respective parastatal or local authority creditors.
Economists yesterday said the mid-term fiscal policy review lacks “substance” on key issues affecting the economy.
Harare-based economist, Mr Takunda Mugaga, said the minister should have “gone beyond the basics”.
“This was a disappointing budget review, devoid of any real substance. It was silent on key issues that should drive the economy. For instance it relegated the significance of the mining sector to the economy, there has been no effort to improve the Interbank market, no additional capitalisation of the Reserve Bank of Zimbabwe, no clear strategy on debt clearance and no investment in power generation,” he said.
Mr Mugaga said the mid-term fiscal review went against the grain of the Government’s stated objective of leveraging the country’s potential in order to attain economic growth.
“The budget is largely meant to support everyday expenditure, which means we will continue to fare with a liquidity crunch.”
In view of the myriad of challenges facing the economy, Zimbabweans were expecting Minister Biti to announce specific measures to address issues such as investment in the country’s energy infrastructure.
There is also agriculture financing, management and streamlining of the civil servants wage bill, capitalisation of the central bank, automation of tax administration services and a review of the country’s mineral taxation model among other areas.
Other observers contend that the minister particularly “lost the script” on agriculture.
Another economist who asked not to be named blamed Minister Biti for “killing agriculture by refusing to fund the sector”.
He said had the minister given priority to agriculture, the country’s growth targets would have been on course.
“It is strange that (Minister) Biti saw it fit to set aside US$100 million for the census and had enough left over to invest in a failed bank but had nothing to offer to wheat farmers.
“There is no way that we can achieve the set growth targets without substantial investment in agriculture. Let’s face it, agriculture at its prime employed lots of people in this country and was effectively the backbone of the economy.
“Various other sectors were feeding off the buoyancy of this sector and now you say you do not have any resources to fund agriculture, obviously he has lost it.”
The economist added that Minister Biti had effectively killed the goose that lays the golden egg and for as long as his stance did not change, there is no hope for the turnaround of this economy.
BancABC group economist Mr James Wadi said the lack of fiscal space that has seen the Finance Minister revising the budget downwards shows that the economy is over stretched.
He said the current scenario where there is a huge demand for revenue in a shrinking economy was not sustainable as such demands are only feasible in a growing economy.
“We are hitting a situation where even the productive sectors that have been propping up the economy are being choked by impediments and everything is slowly grinding to a halt,” he said.
In this regard he said there was need for the country to focus on areas that can produce quick wins and attract Foreign Direct Investment into the country.
Some observers are, however, of the opinion that the minister could not have done much more than he did in view of the downside risks that have been dogging the economy since the start of the year.
It is these negative factors that forced Minister Biti’s hand to review the budget downwards to US$3,6 billion from the initial US$4 billion, as well as reviewing this year’s Gross Domestic Product growth projection from 9,4 percent to 5,6 percent.
Labels: BUDGET, CIVIL SERVANTS, MDC, SABOTAGE, SALARIES, TENDAI BITI
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Constitution coalition asks government to publicise budget
By Masuzyo Chakwe and Kondwani Munyeka
Mon 18 June 2012, 13:21 CAT
THE Civil Society Constitution Coalition (CSCC) has appealed to the PF government to demonstrate genuine commitment to the constitution-making process and not fail the Zambian people.
CSCC spokesperson Father Leonard Chiti stated that the coalition was pleased with the technical committee's extension of the consultative period on the 2012 draft constitution.
The coalition called on the technical committee to clearly state what would be achieved during this extension period, such as completion of the much-waited simplified version of the 2012 draft constitution; translation of the simplified version and the expeditious distribution of both the English and local language versions across the country.
"The Technical Committee should adjust its roadmap to reflect the changed timelines which should give a clear picture of when the current process is likely to end and when the provincial, sectoral and national conventions will be held," according to the civil society.
They further requested the technical committee to share with the public the much anticipated guidelines to be used during the holding of the planned conventions and how delegates would be selected.
"It's a known fact that there are many players in this process and the interest of the many Zambian citizens need to be protected and this can only be done once processes are well defined and are transparency for public scrutiny," the coalition stated.
"The technical committee should also state both budget and process implications in relation to the time extension."
The coalition noted with concern the lack of immediate appointment of a referendum commission.
They stated that if Zambians were to be assured of a constitution whose Bill of Rights and entire content was one that was acceptable under international human rights standards, there would be need for a referendum.
The coalition recommended that in line with the provisions of amendment to the Bill of Rights under the current constitution, President Michael Sata should appoint a referendum commission which would prepare for holding of a referendum.
"As things stand today, we are of the strong view that the current process does not define an end in itself thereby rendering it vulnerable to both manipulation and being abandoned on the way," the coalition stated.
They urged the government to ensure that a comprehensive budget that supports the process was quickly drawn and made public to instil confidence in the constitution-making process.
The coalition stated that lack of transparency in the use of state's finances leads to mistrust by members of the public when expenditures were not explained.
"The Ministry of Justice in March this year indicated that a budget would be made public but to date, there has been no information to that effect," they stated.
"In the past, the coalition has raised concern on the lack of a publicly announced budget for the process. In an earlier meeting we held with the technical committee, we reminded them that the National Constitution Conference expenses were of grave concern to the public."
They recommended that the PF government makes public the entire working budget, clearly stating how much government had committed to the process and also what had been solicited from the cooperating partners.
The coalition observed that unlike the last attempt at putting together a people-driven constitution, the current process lacked sound legal backing and protection.
The coalition also observed that there was no legal protection for the roadmap to ensure that issues of drafting, validation, adoption and enactment were all legally protected.
"Without protection, the technical committee's work risks being politicised and watered down in the end. We urge the PF government to take to Parliament a Bill that would address the issues highlighted," they stated.
The coalition comprises ActionAid International Zambia; African Women Millennium Initiative in Zambia (AWOMIZ), Anti-Voter Apathy (AVAP), Church of God, Citizens Forum; Civil Society for Poverty Reduction (CSPR), Hope for Human Rights, Infotainment Movement, Jesuit Centre for Theological Reflection (JCTR), Save the Children, Southern African Centre for the Constructive Resolution of Disputes (SACCORD), Transparency International Zambia (TIZ), Treatment Advocacy and Literacy Campaign (TALC).
Others are, The People's Indaba, Women and Law in Southern Africa (WLSA), Women in Law and Development in Africa (WiLDAF), Zambia AIDSLaw Research and Advocacy Network (ZARAN), Zambia Civic Education Association (ZCEA), Zambia Community based Natural Resources Management Forum; Zambia Land Alliance (ZLA), Zambian Union of Financial Institutions and Allied Workers (ZUFIAW/FFTUZ) and Zambia Women Media Association (ZAMWA).
Meanwhile, Technical Committee spokesperson Simon Kabanda urged civil society organisations and political parties to use their structures in ensuring that all Zambians access the draft constitution.
In an interview on Saturday, Kabanda said stakeholders play a very important role in ensuring that even the remotest areas of the country were reached.
His comments come after some chiefs expressed disappointment over failure by the committee to ensure that copies of the draft constitution reached their areas.
Chief Macha of Choma remarked: "I can't say anything about the constitution because to date we have not yet seen these copies in my chiefdom; maybe it's because we are in the bush."
And technical committee spokesperson Simon Kabanda said the committee had distributed copies in all parts of the country, covering all the 150 constituencies and also offices of district commissioners.
He said through this extension period, the committee had received a very good response.
Kabanda said no further extension would be made.
"After the July 31, we shall then hold consultative meetings in all provincial centres and thereafter we have to go for the national convention. Therefore, people should take advantage of this period and make all their submissions," said Kabanda.
Labels: BUDGET, CONSTITUTION
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Kitwe council presents K93.4bn budget
By Misheck Wangwe in Kitwe
Wed 04 Jan. 2012, 13:25 CAT
KITWE CITY Council has presented a K93.4 billion budget for 2012 to be approved
by the central government.
According to the summary of revenue and expenditure estimates for 2012, more than K37 billion would be spent on personal emoluments that include salaries, wages, terminal benefits, personal allowances and other remunerations for workers at the council.
The budget shows that about K8.9 billion would be spent on supplies and services in the city such as purchase of equipment and tools, furniture, chemicals, medical drugs, uniforms, protective clothing and many others.
Under capital projects account from the central government, the council estimates to get about K4 billion.
In terms of income, the council estimates to get more than K89.4 billion in 2012.
The budget indicates that this year the council would get more than K26 billion from rates, K2.7 billion from local rates, K5.7 billion from licences, 1.6 billion from levies.
In other statutory revenues, Kitwe City Council hopes to raise K15 billion from charges such as plot premium and K772 million from permits.
Meanwhile, the Luanshya Municipal Council has presented a K22.6 billion budget for 2012.
In an interview, Luanshya mayor Nathan Chanda said the budget that was approved by the full council was realistic and balanced, based on activities supported by expected levels of income.
Chanda said K8.2 billion, representing 40 per cent of the total budget, would go towards service provision which was the core business of the local authority while K6.96 billion would go towards personal emoluments.
He said the remaining K7.43 billion had been apportioned for capital projects, purchase of motor grader and front-end loader, youth sport promotions and ward development fund among other projects.
Chanda said the estimates of revenue and expenditure have since been submitted to the Ministry of Local Government and Housing, Early Education and Environmental Protection for approval.
Labels: BUDGET, KITWE CITY COUNCIL
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COMMENT - Welcome to the revolving door between the IMF, World Bank, and African finance ministries. Something the Europeans are finding out about too late in their own countries. No wonder that the FM said something different to the people than he said to the IMF. They are working for the IMF/WB. That's why no one objects to austerity, the liquidity gap, currency devaluation, or all the other ways the African economy is being kept down. This is the end stage of globalisation.
State House comments on Dr.Musokotwane’s double pay
TIME PUBLISHED - Sunday, December 18, 2011, 10:06 pm
Following a number of public pronouncements and accusations, and blatant assailing of the integrity of the Republican President, His Excellency Mr Michael Chilufya Sata, and Ministers by ex-finance minister Dr. Situmbeko Musokotwane, State House has decided to reluctantly clarify this matter of public interest.
Dr. Musokotwane was employed by the Bank of Zambia as an Advisor-Research in 1991.
He requested to get leave of absence of two years at the time he was acting—for administrative convenience—as Deputy Governor (Operations) in October 1997 when he took up the post of Economic Advisor to the Minister of Finance.
He further requested for leave of absence to take up a position offered by the International Monetary Fund (IMF) as General Advisor to the Governor of the Central Bank of Swaziland in 1998.
On 8th January 1999, Dr Musokotwane applied to go on early retirement through Voluntary Early Separation Scheme (VESS) and was separated from the Bank of Zambia with effect from 11th January, 1999. Payment for his separation package was made to him in December 1999.
In September 2003, he was appointed as Secretary to the Treasury with an arrangement that he be recruited as an ‘ADVISOR’ to the Governor of the Bank of Zambia, for purposes of him accessing a Bank of Zambia salary, and ‘seconded’ to the Ministry of Finance as Secretary to the Treasury for a period of two (2) years to August, 2005.
The public may wish to know that this is a junior position for the Secretary to the Treasury who is the supervisor of the Central Bank as Chief Controlling Officer of the Government.
The position of Advisor is at a level of Director at the Bank of Zambia, a position which is below that of Deputy Governor of the Bank (a position which Dr Musokotwane had served in prior to asking for leave of absence).
He was paid his gratuity by the Bank of Zambia as per the contract he signed with the Bank in August 2005. His contract as Advisor to the Governor was extended for another two years in June 2005 to September, 2007 after which period he was paid his gratuity accordingly.
It was further extended for another two years in August, 2007, when Dr Musokotwane was re-engaged as Special Advisor to the President.
On 14th November, 2008, when he was appointed as Minister of Finance, Dr Musokotwane received two salaries (from the Bank of Zambia and from the Central Government) for the period November 2008 to January 2009.
Dr Musokotwane received a salary of K210,664,558.20, that is K70,221,519.40 per month from the Central Bank , and he further received K40,478,512.10, that is K10,281,069.30 as salary for the month of December 2008 and K30,197,442.80 as salary for the month of January 2009 with arrears of salaries and housing allowance for November 2008, from the Government as Minister of Finance.
Accumulatively, from this arrangement with the Bank of Zambia, from 1st September 2003 to January 2009, Dr Musokotwane collected a total of about K5.5 billion in form of salaries, leave pay, leave commutation, Christmas bonus and gratuity.
This amount is far in excess of the amounts which any officer who has served in the capacity of Secretary to the Treasury in the past and present has ever gotten in a period of 4 years, 3 months.
Although this was approved by the previous Government, this excessive payment raises moral issues in terms of equity with regard to the whole of the public sector remuneration payment.
It is quite evident from the foregoing that Dr Musokotwane has no plausibility to stand on moral high ground.
Issued by:
GEORGE CHELLAH
SPECIAL ASSISTANT TO THE PRESIDENT FOR PRESS AND PUBLIC RELATIONS
Labels: BUDGET, CORRUPTION, GEORGE CHELLAH, MICHAEL SATA, SITUMBEKO MUSOKOTWANE
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Zulu complains of insufficient funding to ACC
By Mwala Kalaluka
Sat 17 Dec. 2011, 13:57 CAT
THE allocation of funds to the Anti-Corruption Commission (ACC) has continued to be far insufficient to enable the Commission perform its functions, says justice minister Sebastian Zulu.
Giving a policy statement during consideration of the K60 billion 2012 budgetary allocation to the ACC in Parliament yesterday, Zulu said increased funding would enhance the anti-graft fight.
Zulu said the PF remained committed and dedicated to curb corruption through the injection of political will and collective effort from stakeholders.
"There has been notable improvement in the perception of the levels of corruption in Zambia," Zulu said. "The budget allocation for the Commission for the year 2012 is K60 billion against K55 billion in 2011...the allocation of funds to the Commission has continued to be far insufficient."
Zulu assured that the PF government would adhere to its manifesto to ensure that corruption and impropriety were rooted out in the public sector.
"Zambia has for a long time suffered from damaging effects of corruption," Zulu said.
"We are committed to promoting good governance in the public sector. To show our commitment to deal with this vice, we have, from the onset sent a very strong message to all perpetrators that the time to act has come and the time is now."
Zulu said there would be no sacrificial lambs in the fight against corruption and this was the reason the PF government decided to resuscitate the repealed Section 37 of the ACC Act, which was removed by the MMD government.
Zulu said to this end, initiatives to prevent and detect corrupt trends at public institutions like the Road Development Agency and the Ministry of Health would be put in place.
"Oversight institutions will be strengthened to enable them provide checks and balances," Zulu said.
"The fight against corruption requires not only strong and vibrant leadership but also requires concerted effort from all institutions and Zambian citizens."
Zulu called on the nation to build ethical values so that ordinary Zambians do not wallow in poverty because of a few selfish individuals.
Zulu said it was sophisticated to fight corruption because perpetrators bury their tracks.
Labels: ACC, BUDGET, CORRUPTION
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Biti’s budget hits a snag
Posted by By Brett Mashingaidze at 4 December, at 00 : 14 AM
LEGISLATORS in Zimbabwe’s Parliament have refused to rubberstamp Finance Minister Tendai Biti’s budget and asked for “considerable” time to analyze it. Biti, who has presented skewed Budget statements before, thought this budget debate would be smooth-sailing like every other.
Most of his budgets have made grand promises on paper, but failed to deliver in real terms the amounts promised to government ministries. MPs do not want the Executive to act like it has authority over the legislature.
Chairman of the Portfolio Committee on Budget, Finance and Investment Promotion Paddy Zhanda said legislators would not be forced to debate the Budget hastily just to please the Executive.
He explained how the law allowed legislators considerable time to debate the financial blueprint in the coming year.
“The Public Finance and Management Act allows for the presentation of the Budget 30 days before year end or 30 days after.
“Therefore, we should be, as the august House, given time to unpack this Budget and this has not been done.
“If this continues, then there will be need to amend the Act to give specific timelines for the presentation of the Budget. I, therefore, move that this matter be postponed,” he said.
There was cross party agreement to Zhanda’s statement as none of the MPs in the House objected to the postponement.
Biti seemed to be the only member in the august House keen to see the Budget passed.
The unity exhibited by MPs from MDC-T and Zanu-PF in refusing to debate the Budget was extraordinary.
According to experts, it is possible for MPs to force a rethink of the entire Budget.
“MPs have become increasingly discontented about Parliament being treated as a rubber-stamp institution by the executive. What can they do if not happy with aspects of the Budget?” reads a post by parliamentary monitor, Veritas.
“According to Standing Orders, MPs cannot vote to increase allocations proposed by the minister, but they are allowed to show their disapproval by reducing or omitting allocations for purposes not acceptable to them.
“Or they could refuse to approve the Estimates and the Bills, thereby forcing a re-think of the Budget. That would be unusual, but would not necessarily bring the business of Government to a grinding halt at the end of the year”.
Labels: BUDGET, TENDAI BITI
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Biti budget gives false picture: President
Friday, 02 December 2011 00:00
Herald Reporter
President Mugabe hands over computers to Malcolm Tafira (right) and Ropafadzo Dambire of Eaglesvale High School while their teacher Mrs Lucia Chiwara looks on at Zanu-PF Headquarters in Harare yesterday. The President was impressed by the school’s choir at the launch of the Schweppes Employee Share Trust on Wednesday and offered them computersPRESIDENT Mugabe yesterday lashed out at Finance Minister Tendai Biti for coming up with a national budget that is
full of hope, but difficult to implement. He made the remarks while addressing the Zanu-PF Central Committee meeting at the party's headquarters in Harare.
"The recent budget, some say it has a better allocation for agriculture, but it is only figures, it is realisation that matters.
"So the inflation of figures (in the budget) is meant to generate hope . . . that is a false picture because those figures will not be met at the end. Well, that is the result of the inclusive Government. The result of our poor performance in the 2008 election," President Mugabe said.
The Head of State and Government and Commander- in-Chief of the Zimbabwe Defence Forces, said in his budget last year, Minister Biti failed to release funds to some ministries despite giving them such resources on paper.
President Mugabe said discord in the inclusive Government on policy issues made it imperative for the country to go for elections next year.
He gave an example of agriculture, saying the MDC formations were reluctant to fund the sector as evidenced by the failure by Minister Biti to release funds to the Grain Marketing Board to pay farmers for grain delivered.
"We are worried because there is no unanimity in that Government. On the financing of agriculture for example, we would want farmers to be well-funded but others (MDC formations) are not as serious minded as we are," President Mugabe said.
He described yesterday's Central Committee meeting as critical as it prepared Zanu-PF for its 11th Annual National People's Conference set for Bulawayo next week.
"It is a critical meeting that we should prepare for adequately since it is the last such conference before we go for general elections.
"The forthcoming conference more or less has the same status as our five-year congress," President Mugabe said.
He said the conference should therefore prepare Zanu-PF for the general elections and urged the Central Committee members to articulate party policies like the indigenisation and economic empowerment to the grassroots.
The policy seeks to economically empower the once marginalised indigenous people by acquiring at least 51 percent shareholding in foreign-owned companies.
President Mugabe branded the inclusive Government "illegal and unconstitutional" saying individuals in the Sadc-brokered political arrangement were not elected into their offices and do not have the people's mandate.
He said Zanu-PF was not in a position to implement policies that benefit the people because of lack of cohesion in the inclusive Government.
The President said going for elections was the only alternative left, but noted that the MDC formations were opposed to the ballot.
President Mugabe said he expected Copac to complete the drafting of a new constitution within a month and pave the way for elections.
"We look forward to the conference in Bulawayo succeeding. We as the Central Committee have to ensure that it succeeds and produces a result that is resoundingly revolutionary. A result that enhances our national sovereignty," President Mugabe said.
Earlier, President Mugabe had donated 20 computers to Eaglesvale School in Harare at a function held at the Zanu-PF headquarters.
Labels: BUDGET, ROBERT MUGABE, TENDAI BITI
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COMMENT - Praise singing for the MMD's austerity budget, which underfunds youths, agriculture and the army. Remember that the MDC did not want benefits from the diamond industry or mining at all. They wanted the likes of Anglo-American to keep it all, so they could 'create jobs for Zimbabweans' (hewers of wood, fetchers of water, anyone?).
Hope for the poor in welfarist budget
29/11/2011 00:00:00
by Toendepi Shonhe
THE US$4 billion 2012 National Budget presented by Finance Minister Tendai Biti last Thursday was by all measure, people-centred and problem solving. In this sense, the budget statement was both historic and democratic as evidenced by both its formulation process and the ultimate product.
Never in the history of this beautiful country has a Minister of Finance travelled the length and breadth of Zimbabwe to interact with Zimbabweans of all origins and political orientation as they aired their views, expressing their aspirations, engendering and rooting participatory democracy in policy making.
Consultations were carried out in both rural and urban areas, with labour organisations and employers associations, traditional leaders and war veterans, parliament and governments departments all to ensure that the views from the elites and those of the majority domiciled in the second economy are captured, what he described as both ‘enriching and humbling’.
The quality of engagements at the consultative forums was deliberative and participatory, giving ordinary citizens a voice on their future.
The budget statement therefore reflects that the crafters were fully informed about the situation in the country, making it truly people-centred and people-driven. In practical terms, the budget and the budgeting process recognise that ‘top-bottom’ approaches to policy only make people ‘subjects and objects and not shareholders and crafters’ of policy making robbing citizens the opportunity to define their destine and shaping their welfare.
The consultative process enabled the Ministry to establish the key challenges facing the Zimbabwean economy, and crying for redress. He summarised these as ‘political discord and disunity on key national policies, power and energy crises, unemployment hovering beyond 70%, transparency over diamond revenues streams from Chiadzwa, access to basic goods and services, including business licences, national identity cards and banking services, liquidity and high cost of money, labour market flexibility, wages and practices and their connectivity to productivity.
The broad-based consultations enabled the identification of the level of indebtedness of the central government to local authorities that is arresting productivity at local level, massive high and inefficient government expenditure, the need to prioritise infrastructure development, clean water supply, social security, agriculture support and food security, price stability and the need to ensure policy implementation consistency as some of the challenges urgently requiring government attention.
Zimbabweans who participated in the consultative process will find the issues they raised to be in sync with those underscored in the budget statement. The issues also resonate with citizens who failed to get an opportunity to air their views because some of the issues addressed in the budget are a common knowledge that they needed remedy.
Take unemployment as an example, with present estimates of 70-80%, every Zimbabwean knows that this is a national catastrophe, whether the people pointed this out at a consultative meeting or not. That the budget policy statement sought to address this challenge means that the Minister is sentient to the problems facings Zimbabweans today.
It is clear that an unemployment level of between 70-80% has a negative effect on the economy, making it the most damaging challenge facing Zimbabwe today. As such, any remedy that relegates unemployment cannot be the panacea for Zimbabwe.
The budget statement therefore identified measures intended to create employment opportunities for the unemployed and poverty stricken citizens. The budget statement focused on capital formation through infrastructure development and public works as crucial in fostering economic growth and in turn job creation, bolstering chances for the government to achieve its stabilisation role through its allocative responsibility.
The government has, therefore, placed emphasis on capital formation with significant resources being allocated for infrastructure development. In particular, at least US$300 million from diamond sales has been earmarked to contribute to a total of US$800 million reserved for infrastructure regeneration.
And yet, the most significant step taken to ensure employment creation is the setting up of a ‘job fund’ of US$20 million. This will be supported by some measures being taken to create a stable macro-economic environment appropriate for business and for economic growth. For instance, the national budget statement proposes a 25 percent increase in customs duty on fresh produce in order to protect local small hold farmers, promote growth and poverty eradication spurring job creation. A similar effect is envisaged on wheat flour import and the packaging of flour, rice and salt where a new duty was introduced.
In the same vein, the budget statement placed emphasis on the need to resolve the debt overhang, attracting foreign direct investment (FDI) that is critical for economic growth and employment creation, leveraging on mining, revitalising industry, through the Industrial Revival Fund of US$60 million, supporting SMSs to the tune of US$36 million, small scale irrigation schemes support for US$15 million and public works supported to the tune of US$3 million.
The public works programs are set to eradicate poverty, promoting food security, rural infrastructure development and maintenance for community development.
It is clear from the FDI figures, as a percentage of Gross Domestic Product (GDP) currently at 1.1%, being the lowest in the region, the highest being Angola at 22.8% in 2010, that political uncertainties and policy inconsistencies associated with the indigenisation law have had a negative effective on business confidence as well as peace and stability in the country.
No wonder, the budget statement puts emphasis on job creation rather than transfer of non-existent wealth as a policy priority. And off-course, this is timely and sustainable.
As highlighted in the budget statement, while the country remains reliant on internally generated resources and severely limited fiscal space, the budget statement has tried to respond to immediate and long term needs, mainly job creation and upliftment of the citizens and not sharing of a shrinking cake through a random indiscriminate indigenisation facade.
Toendepi Shonhe is the Director General of the MDC-T. He holds a Masters in Management in the field of public policy and writes in his personal capacity. He can be contacted on toendepik@gmail.com
Labels: BUDGET, MDC, NEOLIBERALISM, TENDAI BITI
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Zimbabwean youths roundly slam Biti
Tuesday, 29 November 2011 00:00
Herald Reporter
ZIMBABWEAN youths have slammed the 2012 National Budget and accused Finance Minister Tendai Biti of sidelining them from participating in the mainstream economy.
In his US$4 billion budget last week, Minister Biti allocated US$2 million to the youths for projects, a figure the latter described as an "insult".
In an interview yesterday, Zimbabwe Youth Council chairman Mr Hamilton Pazvakavambwa said the minister was trying to reverse Government's economic empowerment drive.
"It has been an elimination of the empowerment programme by substitution of the employment agenda. Instead of putting more money to empowerment, he (Biti) has put US$2 million for (a) jobs fund for companies to employ young people yet we thought young people were supposed to be entrepreneurs," he said.
"His decision for youths to get money through Stanbic is also questionable. If Stanbic wants to take a positive step forward into youths development then why not follow the Old Mutual way and assist in projects that can see the youths of this nation prosper," he said.
Old Mutual recently launched a US$30 million Youths Fund, where young people will get money for various projects.
Mr Pazvakavambwa said agendas of known political parties should not be reflected in national budgets.
"As young people, we refuse to support anything that ties us to a certain political following and ideology. The Minister should be reminded that he should not settle his political and personal scores on a national budget that determines the lives of many," he said.
He said the minister was "disempowering" the youths.
"Last year he theoretically gave US$5 million for youths and this time around decides to go down. This is against what was agreed by the Heads of State meeting in Equatorial Guinea this year that there should be accelerated youths empowerment for sustainable development. The budget is completely divorced from this. It shows that young people continue to be at the peripheral in the society without participating in the main economy," he said.
Labels: BUDGET, TENDAI BITI, YOUTHS
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Viewpoints to Biti’s 2012 national budget
Posted by By Our reporter at 26 November, at 05 : 10 AM
ZIMBABWE’s Finance Minister Tendai Biti on Thursday presented a 4-billion national budget statement.
While some have described the statement as pro-poor and progressive, others say the fiscal statement was populist and predictable. The 2012 national budget statement projects a 9.4% economic growth next year.
Confederation of Zimbabwe Industries President, Dr. Joseph Kanyekanye, who described the statement as expansionary and consistent with the Medium Term Plan, applauded the Minister for recognising the important role played by the mining and agriculture sectors.
He added that there is need to leverage the country’s sound resource base for the attainment of sustainable economic development.
Business Council of Zimbabwe Chairman, David Govere, welcomed financial support extended to industry in particular the US$60 million earmarked for broader Industrial Revival Fund.
He, however, said more needs to be done in supporting agriculture and value addition.
Describing the budget as ambitious, economic analyst, Kipson Gundani said the 2012 national budget’s thrust towards social investments is welcome in as far as it creates employment and sustainable economic growth.
Tax reform has been one of the major highlights of the 2012 budget with the suspension of duty on products that are locally produced, adjustment of the tax free threshold from US$225 to US$250, as well as review of royalties on gold and platinum upwards from 4.5% and 5% to 7% and 10% respectively.
Tax expert, Masaire, who welcomed the tax measures, however believes the proposed penalties on fiscalised tax registers as well as the 45% top bracket tax are burdensome.
Against the expectations of the civil servants, the Finance Minister did not adjust the salaries of the civil servants, arguing that recurrent expenditure is accounting for around 63% of the total budget.
Biti’s failure to allocate funds for the 2012 elections has been a major talking point. His theme of sustaining an inclusive growth with jobs has also been perceived by other sectors as denying the empowerment approach in preference to his party’s manifesto which chooses to rather focus on jobs.
You can download the full report by clicking this link:
Labels: AGRICULTURE, BUDGET, JOSEPH KANYEKANYE, NEOLIBERALISM, TENDAI BITI
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Creating a fair, shared economy
24/11/2011 00:00:00
by Tendai Biti
Opening remarks by Finance Minister Tendai Biti while presenting the 2012 budget at the House of Assembly on Thursday, November 24:
"Development requires the removal of major sources of unfreedom: poverty as well as tyranny, poor economic opportunities as well as systematic social deprivation, neglect of public facilities as well as intolerance or over-activity of repressive states.
Despite unprecedented increases in overall opulence, the contemporary world denies elementary freedoms to vast numbers –– perhaps even the majority–– of people."
Development as Freedom (2000): Amartya Sen
Mr Speaker Sir, the crafting of the 2012 Budget was a daunting task, given the triple ‘demons’ of a highly-charged political environment, insatiable fiscal demands on the State and a highly volatile global financial environment.
This is more so in 2012 where, in addition to our traditional ‘elephantine’ demands, the obligations of monetising the Peace Process, particularly the Constitutional Referendum, are unavoidable.
Mr Speaker Sir, the demands on the Budget are so large visà-vis the resource envelope such that in the words of Oliver Baloyi, ‘tawanzisa mbambo padehwe reshindi varume we’ [we have put too many people on a squirrel-hide mat gentlemen].
Thankfully Mr Speaker Sir, through the grace of God, I have the pleasure of moving a Motion in terms of Standing Order No. 94(1) of the Esteemed Rules of this August House that leave be granted to bring in a Bill in connection with the Revenues and Expenditures of the Republic of Zimbabwe for the fiscal year January––December 2012.
Mr Speaker Sir, this Motion is brought in compliance with the provisions of our Law. Section 103 (1) of the Constitution of Zimbabwe, read together with Section 28 (1) (a) of the Public Finance Management Act [Chapter 22:19], obliges the Minister responsible for Finance to prepare and lay before Parliament, on a day on which Parliament sits, before or not later than 30 days after the start of each financial year, Estimates of Revenue and Expenditure of Zimbabwe for that financial year.
Mr Speaker Sir, it has been a long, lonely and bumpy road that we have traversed since 16 February 2009 – exactly 1,013 ‘tortured’ days to date.
Mr Speaker Sir, it was evident from the very first day of the Inclusive Government that the State of our Economy was parlous and atrophying, demanding that difficult, but strategic choices had to be made, which were both curative and palliative.
Those decisions, Mr Speaker Sir, were made through the Government Work Programme and the Short Term Emergency Recovery Programme (STERP), representing the first step towards the economic rehabilitation of our country.
STERP focused on:
[I have put the neoliberal code in boldface - MrK]
• Restoring macro-economic stability, with special emphasis on curtailing the cancer of hyper-inflation;
• Restoring basic social services, including the re-opening of hospitals and schools;
• Job creation and supply side recovery;
• Restoring the functionality of enablers and public utilities, in particular energy, water and sanitation; and
• Nation building and peace building through:
• Establishment of peace and stability in the country; and
• The Constitutional Making Process and the advancement of the Democratisation Agenda.
The tough decisions made in the nascent days of the Inclusive Government brought material dividends which included the following:
• Macro-economic stabilisation, particularly in containing inflation;
• Improved capacity utilisation in the productive sectors of agriculture, mining and manufacturing, from averages below 10% to around 30-50%;
• Removal of price distortions, in both foreign exchange and goods markets;
• Resuscitation of financial sector services;
• Improvement in public service delivery, particularly in the areas of water and sanitation, transport, health and education sectors;
• Improvement in social protection programmes for vulnerable groups;
• Overall business confidence building;
• Policy consistency and predictability on key policy fundamentals;
• The enactment of key legislation dealing with the credibility of public accounts; and
• Re-engagement with the international community.
Following the implementation of policy measures to stop economic haemorrhage and melt-down, Government, in STERP II and the 2010 Budget, increased attention on capital formation and overcoming the overall infrastructural deficit.
Under STERP II and the 2010 Budget theme “Reconstruction with Equitable Growth and Stability” we, thus, in this period increased the share of public resources allocated towards Public Sector Investment Programmes (PSIP) and other public works.
Mr Speaker Sir, Honourable Members will recall that the extensive consultations we carried out last year in preparation for the 2011 Budget had highlighted the high level of despondency, alienation and reification over public affairs amongst our people.
Clearly, the majority of our citizens felt that they were excluded and that they were innocent bystanders in an economic environment that was perceived as neither fair nor inclusive, prompting the theme of our 2011 Budget - “Creating a Fair Economy: Shared Economy, Shared Development, Shared Transformation”.
Doing justice to this, however, remained constrained by the confines of the little fiscal space we have, further challenged by a disproportionally high wage expenditure allocation consuming over 60% of our resources and that way compromising expenditures towards human capital development, social delivery and capital formation.
Our work in the last 35 months, executed under the various thrusts of stabilisation, reconstruction and creating a fair economy, has been intended to stop the haemorrhage, stabilise the economy, reconstruct and graduate it towards sustainable rapid growth. We had to catch up with the rest of Africa that had shown us a clean pair of heels in the preceding 15 years.
BUDGET CONSULTATIONS
Mr Speaker Sir, consultations and preparations for the 2012 Budget benefitted from the guidance offered by the issuance of a Pre-Budget Strategy Paper which Treasury prepared in August 2011.
The extensive consultations saw Treasury teams receive views of our people throughout the country, that is from Nyamaropa to Nyamandhlovu, Chiendambuya to Chimhandamabgwe, Chirimuhanzu to Chivi, Nerupiri to Nembudziya, Zibhowa to Ziyaminya, Muzokomba to Muzarabani, Forty Four to Fort Rickson, from Dotito to Dongamuzi.
In this regard, allow me, Mr Speaker Sir, to thank the hundreds of people that we interacted with. These ranged from captains of industry and their chambers, the CZI, ZNCC, Chamber of Mines, to trade unions, including the ZCTU, ZFTU, and Government Staff Associations.
Mr Speaker Sir, ordinary individuals also had opportunity to input into the Budget Consultative process. Hence, we were able to listen to the likes of Brighton Murimi, Pardon Mudzimu we met in Murehwa, Oliver Baloyi, Sylvester Chin’’anga, Tichaona Sithole we met in Zaka, Nation Ndlovu, Mainos Dube we met in Gwanda, Eric Bloch, Donald Khumalo and Calvin Ncube we met in Bulawayo, to name a few.
Mr Speaker Sir, the 2012 Budget consultative process would have been incomplete in the absence of the engagement of Parliament and its Committees, including the Budget, Finance and Investment Portfolio Committee.
Mr Speaker Sir, allow me, therefore, to express my appreciation for Parliament’s invaluable contribution to the Budget consultative process.
The inputs of the Budget, Finance and Investment Portfolio Committee, and all the Honourable Members of the House of Assembly and the Senate who were able to either attend or input into the Pre-Budget Seminar for Members of Parliament held in Victoria Falls over 2-5 November 2011 were invaluable.
In particular, I would like to pay a special appreciation to your leadership and guidance, Mr Speaker Sir, as well as that of Madam President of the Senate, throughout the Pre-Budget consultative process.
Overall, our Budget Consultative public outreach programme was as enriching as it was humbling. The fact of the matter is that our people know what they want and are able to recognise patronising ‘top down’ approaches in development issues that treat them as subjects and objects of policy and not shareholders and crafters of the same.
In this regard, it did not matter whether we were listening to our Traditional Leadership at Chibhanguza Hotel in Murewa or to ZAPU veterans in Gwanda.
Secondly, Mr Speaker Sir, once again the sense of alienation and despondency remains high. There is a clear anti-Harare sentiment out there. The feeling is that everything happens in Harare and that to be a true and participating citizen of Zimbabwe one must be domiciled in Harare–– ‘everything is in Harare and Harare is everything.’
Furthermore, Mr Speaker Sir, there is overwhelming self-evident frustration over the seemingly endless and on-going political discord and disunity within our country.
Mr Speaker Sir, the issues that are uppermost in our people’s minds can be summarised as follows:
• Political discord and disunity;
• Power and energy crisis;
• Unemployment;
• Transparency over diamond revenue streams from mining at Chiadzwa;
• Easy access to basic services, including business licences, national registration documents and banking services;
• Education, health and other social service delivery;
• Lack of liquidity in the economy and the high cost of money;
• Labour market inflexibility, and wages and labour practices that are not connected to productivity;
• Ministries’’ and Government Departments’’ indebtedness to Local Authorities and other public institutions;
• Unproductive and uncontrolled Government expenditure;
• Reconstruction and rehabilitation of road infrastructure and completion of on-going projects;
• Guaranteeing clean water supply and improved sanitation services;
• Social protection and safety nets, including for people living with disability;
• Support for agriculture and household food security;
• Continued stability in the price level, including sustainable wage levels;
• Consistency in policy implementation.
THE THRUST OF THE 2012 BUDGET
Mr Speaker Sir, the harsh reality from our consultations is that we are a small dual enclave economy, arrested by unevenness, inequality, poverty and under-development.
There is stagnant accumulation and total absence of linkages between the means of production and the means of consumption. In short, ours is a rent-oriented economy dominated by underproduction, informalisation and self-induced policy distortions.
Mr Speaker Sir, implementing the Medium Term Plan’s (MTP) vision of “Enhancing a democratic developmental State anchored by a growing and transforming, socially just economy” would go some way towards answering some of the economic concerns being raised by our people out there.
Rallying around such a unified common vision, underpinned by the implementation of programmes guided by the compass of the MTP, launched on 7 July 2011 is, Mr Speaker Sir, an imperator to addressing the prevailing development deficit.
In this regard, we have an obligation to shift Government resources from corrosive recurrent expenditure in favour of inclusive and pro-poor growth areas - a difficult task given the legacy issue of a high and disproportionate share of wages in overall Budget expenditures.
We have to live our motto: “We eat what we kill”, avoiding fiscal sclerosis of unbudgeted expenditures, whether it be on account of wages, travel, support to ailing parastatals, among others.
Expenditure management and fiscal control requires discipline and deep appreciation that nations, like ordinary households, cannot live beyond their means without paying a price.
The penalty for fiscal indiscipline being macro-economic destabilisation, debt overhang and economic disequilibrium – in short, the dark days of our lost decade where we virtually rewrote every downside economic statistic.
Quite clearly, it is important that the top leadership of our Government remain at the forefront of fiscal prudence and discipline in this economy. Without their oversight and enforcement, their discipline and their wisdom, this economy will fail.
Equally, this Parliament must carry out its Constitutional duties, as an overseer of the cataleptic omissions and commissions of the Executive. Civil society, ordinary citizens and the Press must also play their part in ensuring that national assets, including the Consolidated Revenue Fund, are not pillaged through corruption, clientelism, or bad decisions.
Thus, this Budget will focus on the following issues:
• Consolidating macro-economic stability, founded on an anti-cyclical macro-economic framework;
• Deliberate focus on inclusive growth with jobs;
• Attending to the issue of capital formation through Public Sector Investments, with special emphasis on completing outstanding capital projects as opposed to green fields;
• Ensuring and establishing food security;
• Redesigning the financial services sector to promote savings, financial deepening, viability, sustainable finance to the business sector, as well as reduction of financial sector vulnerability;
• Decentralising allocation of resources, with special emphasis on even and equal treatment of Provinces;
• Investment in social services delivery, in particular health and education;
• Creating a conducive “Doing Business Environment”;
• Monetising the Peace Process, in particular the Constitutional Referendum, National Healing and the GPA democratisation imperators;
• Tackling critical enablers, in particular energy, water and sanitation; and
• Special focus on rural under-development through addressing rural energy, water and agriculture.
In short, Mr Speaker Sir, we intend to focus on attaining both, growth that is pro-poor, broad based across all sectors and, a pattern of growth that moves us towards structural transformation.
More critically, Mr Speaker Sir, we intend, within the confines of the limited fiscal space we have to create and support an environment conducive for investment that addresses issues of equity and equality of opportunity across the country. Harare cannot continue to be the sole development centre of the State.
Mr Speaker Sir, put simply, the pursuit of inclusive growth, growth with jobs is the focus of this Budget.
GLOBAL OUTLOOK
Mr Speaker Sir, our economic fortunes are also inter-twinned with developments in the global economy.
Recent global developments paint a gloomier outlook for the world economy, with some of the bigger economies, most notably the Euro zone and the USA, experiencing even deeper crises into the last half of 2011 and into 2012.
The crisis also comes at a time when parts of Asia are experiencing devastating natural disasters, while the Middle East and some northern parts of Africa are coming to terms with impacts of socio-political unrest.
The BRICS countries, particularly China, India and Brazil, are not spared either, with the same facing inflationary pressures.
Therefore, global economic growth is now projected to slow down to 4% in 2011 and 2012, from over 5% in 2010. However, this growth will be uneven, with weak growth of about 1.5-2% in advanced economies, moderate growth of around 4.5-6% in Sub-Saharan Africa and Latin America and relatively high growth rates of around 8% in parts of developing Asia.
GLOBAL VULNERABILITY
Slowdown in global economic activity also poses risks of large and abrupt capital outflows from emerging economies, including Zimbabwe. This will likely trigger slow-down in financial lending, commodity prices and export realisations. Banks with underlying vulnerabilities related to excessive credit, might experience systemic risks.
Mr Speaker Sir, it is also pertinent to point out that in general terms, Sub-Saharan Africa is coping better with the present global financial crisis than it did with the previous ones of 1975, 1982 and 1991.
Core to this has been the existence of pre-crisis macro-economic policy buffers and the adoption of counter cyclical fiscal policy responses–– key lessons for Zimbabwe.
Zimbabwe’s vulnerability to growing global financial uncertainties is not small, given that our current account deficit is to a large extent financed by inflows of short-term capital.
Furthermore, to the extent that our recent growth pattern has been commodity driven, prolonged sluggish global growth would exert harder policy options for our economy.
In order to navigate this storm, Zimbabwe should adopt fiscal responses that anchor trade competitiveness and strengthen fiscal policy effectiveness in dealing with both global and domestic shocks.
In short, it is important to continue executing an anti-cyclical macroeconomic policy framework, whilst at the same time creating fiscal space to finance critical infrastructure and social expenditures.
Furthermore, our limited access to external financing necessitates that we employ strategies for re-building fiscal buffers. This is precisely the reason why we continue to maintain the SDR as a reserve.
However, this is not enough. Productivity and equilibrium must be increased so that we are better able to protect ourselves against external shocks.
High food and energy prices also underscore the need for Zimbabwe to improve social safety nets and building of reserves and fiscal buffers–– all of which require exercising prudent fiscal discipline.
Diversification should also be pursued to avoid over-reliance on a few commodity exports and markets, that way creating scope for developing countries to reduce the impact of shocks.
[CLICK HERE to read full budget statement]
Labels: BUDGET, MDC, NEOLIBERALISM, STERP, TENDAI BITI
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Hichilema rubbishes first PF budget, says there is no break from past
November 16, 2011 | Filed under: Statements | Posted by: editor
1.0 General OverviewMany people were looking forward to the first national budget presented by the Patriotic Front (PF) Government. The PF made a lot of election promises which many people expected would be fulfilled in the 2012 national budget.
The overall picture emerging from the budget presented by Finance Minister, Alexander Chikwanda is that the budget did not address the key concerns of the Zambian people.
2.0 Key Economic Policies any people were looking forward to a significant change in economic policies.
An examination of the fiscal and monetary policies outlined in the budget shows that there is no real departure from the past.
Gross Domestic Product (GDP), inflation, exchange rate, debt taxation, interest rate, policies and targets have largely remained the same as in the past. For example, the PF’s projected GDP growth rate of 7% per annum is too small and inadequate to provide the type of impact needed to create employment, reduce poverty, lower inflation and improve people’s standard of living.
What was needed was a GDP growth rate of more than 10%.
3.0 Taxation of the Mining Sector
Many people were demanding that the Zambian people should benefit from the country’s mineral wealth. They were expecting the PF Government to adequately tax the Mining Sector to generate financial resources in order to provide better roads, schools, hospitals and other infrastructure. The people were calling for the re-introduction of windfall tax on copper revenue. With copper prices remaining above US$7,000 per tonne, the mines are still gaining unexpected income which is above the planned threshold of US$2,500 to US$3,000 per tonne to make profit. The PF campaigned on the platform of re-introducing the windfall tax. What has changed?
3.1 The people of Zambia deserve to benefit from windfall tax gains
in high copper prices in the same way that the owners of the mines
are reaping supper normal profits. If the PF Government have been
cheated into believing that they will tax the profit of the mining companies to make revenue, they will be in for a rude shock as the miner will continue to declare huge losses for a long time to come due to bad practices by multinational companies such as international transfer pricing, sophisticated taxation tactics and inflated production and operational costs which this PF Government has no capacity to monitor and control.
While the increase in mineral royalty from 3% to 6% is noted, it is
insufficient to raise the amount of revenue expected from the mining
sector. Mineral royalty itself is treated as an expense rather than
a tax. It will still be deducted from total mining revenue for tax
purposes. The net revenue gain by the government will be minimal.
3.2 Furthermore, export duty of 15% on copper and cobalt concentrates to encourage value addition should have remained in place. Its intention has not had the desired effect so far. Rather than reducing, it should have remained while netting in other semi processed minerals ores at 10% or 15%. We need to encourage value addition as a way of encouraging employment.
4.0 Agriculture
The PF government has said agriculture is one of the core sectors, however, a close look at the budget indicates that albeit the said increase over last year’s budget the total allocation in comparative terms to the budget has in fact decreased. The budget allocation for 2012 is only 5.9% of the budget. This is way below the minimum of 10% required by the Abujah protocol. Hence missing the opportunity to meaningfully contribute to poverty alleviation of the majority of our people. A budget that claims to be pro-poor can ill afford to inject only 6% of its budget to agriculture. The PF government should match its words with action.
5.0 Education
Net recruitment of 5,000 teachers falls short of the requirement projected by education authorities to be around14,000. This gives a shortfall of approximately 9000. The teacher to pupil ratio will still remain unacceptably high.
6.0 Bank Corporate Tax
Reduced from 40% to 35% which is intended to increase liquidity of banks and therefore ability to lend out at lower rates is noted. However, unless strictly monitored by Bank of Zambia, this increased liquidity could be used to buy government bonds which seem to be more attractive and secure for banks. If this happens, it will squeeze out the money on the market and hence negate the intended benefits.
7.0 Money in the People’s Pocket
7.1 Many people were looking forward to the national budget to put money in their pockets. Among the majority of the people who voted for the PF were the unemployed people, street vendors, marketers, bus conductors and drivers, taxi drivers, carpenters and other people in the informed sector.
An examination of the national budget shows that there is no money provided for them for their pockets.
7.2 To put money in the pockets of unemployed people, there was need to employ them so that they start earning salaries. There was nothing specified in the budget on new employment levels and targets. As things stand now, our children graduating from high schools, colleges and universities have no jobs on the table.
Put money in the pockets of street vendors, marketers, bus and taxi drivers and other people in the informal sector, there was need to provide loans and other business services to them to start or strengthen their businesses. The PF Government was silent on the matter of assistance to these suffering people. How are they going to have money in their pockets?
7.3 We acknowledge that a small number of people in formal employment will get some tax relief through the increment in the PAYE threshold from K1million to K2 million per month.
First of all, this is inadequate because it falls short of the basic needs, bread basket of over K3 million for a family of six as established by the Jesuit
Centre for Theological Reflections (JCTR) surveys.
The tax-free income should have been above K3 million per month.
Secondly, the tax relief is limited in scope as it provides for employees in the formal sector only who are about 500,000 out of 13 million people.
In order to put money in workers pockets, there is need to increase
their salaries apart from giving them a tax relief.
Public service workers such as Teachers, Nurses, Doctors and Policemen are poorly paid. There is need to review their salaries and other conditions of service. The Minister was silent on the matter.
8.0 New Constitution
The Zambian people are expecting a new constitution which the PF Government promised to deliver in ninety (90) days. In order to have a new constitution, there is need for a referendum, which is basically a general election for people to vote for their new constitution.
It is shocking that the 2012 national budget has no money for a Referendum and the Minister was conspicuously quite over the issue of the constitution and money need to effect it.
9.0 Local Government
In order to enhance decentralisation, more money should be channelled to local authorities. A lot of MPs have been calling for an increase in CDF as a strategy for taking power to the people.
CDF is the only government fund that directly impacts positively on the developmental needs of the people. In the 2012 budget, CDF has only marginally been increased from K720 million to K800 million per year per constituency contrary to the K5 billion MPs were demanding for. Why does government want to centralize funding for development projects? Our suspicion is that the PF government wants to use central government funds as a carrot for mobilising support for the PF government.
10.0 Conclusion
The 2012 National Budget presented by the PF Government has fallen short of people’s expectations.
Being the first budget by the PF government, it should have addressed the major issues confronting the people of Zambia. These issues are unemployment, low incomes for people in rural areas mainly in the agriculture sector, poor salaries and conditions of service for workers in the formal sector, lack benefits from the mining sector for theZambia people and generally poverty affecting the majority of Zambians.
Simply put, the Zambian people were duped into voting for the PF based on false promises. The broken promises are too many. Zambians are now wondering whether or not they voted wisely. They are in a state of disbelief.
It is now becoming a situation where people are from a state of “Don’t Kubeba” to “Don”t Kudabwa”.
Thank you very much.
Hakainde Hichilema
PRESIDENT (UPND)
Labels: BUDGET, HAKAINDE HICHILEMA, PF, UPND, WINDFALL TAX
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COMMENT - My guess is that by this time in 2012, the WB will have a lot of problems of it's own. It is good that the lawbreakers from the previous government are being charged. However, it are criminals like ms. Kadiresan at the IMF and WB that have directed this lawbreaking. Now they are 'uneasy' that the workers of Zambia aren't being robbed and the mines will have to pay. Who owns the shares of the IMF and World Bank? Look into that.
World Bank warns Zambia on dependence on mining in 2012 budget
TIME PUBLISHED - Thursday, November 17, 2011, 4:32 pm
Kundhavi Kadiresan
The World Bank has warned Zambia that the tax shifts that have been introduced in the 2012 budget are likely to increase execution risks and lead to increases prices.
Addressing the media on the 2012 proposed budget, World Bank Country Director for Zambia, Malawi and Zimbabwe Kundhavi Kadiresan, warned that depending on revenue from the mining mineral royalty and the issuance of the bond on the international capital market, increased risks to the budget execution.
“Once there is increased uncertainty about revenue receipts in 2012 because of significant changes made to the tax structure. Also a greater reliance on mineral royalty, which is likely to be much more volatile than PAYE receipts, would increase risk,” Kadiresan warned.
“And two, external borrowing would be difficult to organize given the state of international capital markets.”
The government’s 2012 budget is focused on a strategy aimed at equitable distribution of economic benefits. Towards that end, taxes on low income earners have been reduced, taxes on the mining sector have been increased, budget allocation to social sectors has been significantly scaled up with large increases for agriculture, education, health and infrastructure, user fees for primary health care services have been abolished and grants to local councils doubled.
“The overall thrust of shifts is to enhance pro poor orientation of government’s activities which is commendable,” she said.
“These welcome shifts however come with attendant risks. Risks to budget execution are higher because of higher dependence on mineral royalties which are likely to fluctuate with world prices of export commodities and dependence on external borrowing (the planned US$500 million bond offer) from global markets in an uncertain international environment.”
Ms. Kadiresan said at the current market prices the government’s royalty increase (from 3 to 6 percent) was unlikely to cause serious economic hardships to the mining sector.
“However the situation could change if commodity prices go down significantly,” she said.
“At that time, the government could come under pressure to review royalty rates. Frequent adjustment of royalty rates could, however, send a signal of unstable fiscal regime, thereby reducing Zambia’s attractiveness as a destination for investment for investment in the mining sector.”
She also said the rise in the royalty rate will alter the competitive ranking of Zambia.
On increased prices of essential goods, Ms. Kadiresan said “a sharp increase in expenditures while reducing tax burden on residents, combined with the recent monetary policy measures aimed at reducing lending rates, is likely to put upward pressure on prices.”
Labels: BUDGET, NEOCOLONIALISM, World Bank
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