Categories: Business

Budget overruns worryingly high – ZIPAR

The Zambia Institute for Policy Analysis and Research (ZIPAR) has observed that budget overruns were worryingly high in the first half of 2018 with huge capital disbursements and interest payments being the major sources of the budget overruns experienced from January to June.

ZIPAR Research Fellow Shebo Nalishebo says government spending on debt interest payments have been much more than planned at K9.1 billion spent in comparison to the K6.2 billion that was budgeted for in the 2018 national budget.

Presenting a report in Lusaka during a midyear budget analysis organized by ZIPAR, Civil Society for Poverty Reduction (CSPR) and UNICEF, Mr. Nalishebo says the cost of repaying high government debt is negatively affecting ordinary Zambians as social sector spending is squeezed.

“An increase in government spending on debt interest payments which take up to one in every four kwacha that the government raises in domestic revenues has squeezed spending on social services such as the public service pension fund, social cash transfers and the economic empowerment programmes, he highlighted.

He says overall expenditures were above the projected spending while revenues were largely consistent.

Mr. Nalishebo discloses that total expenditure including the clearance of arrears and debt maturities was above its target and amounted to K39.6 billion representing 14.3 percent of the 2018 projected Gross Domestic Product (GDP) against a target of K34.2 billion representing 12.4 percent of GDP.

He adds that the total revenue and grants amounted to K25.1 billion also representing 9.1% of GDP and close to the programmed target of 25.3 billion Kwacha representing 9.1 percent of GDP.

He states that the soaring expenditures against targeted revenues led to a half year fiscal deficit on cash basis of K12.8 billion representing 4.6 percent of GDP against a target of K7.4 billion representing 2.7 percent of GDP.

And UNICEF Zambia Country Representative Francis Muradzikwa said 40 percent of children in the country are stunted due to poor nutrition and only 30 percent of children move from primary to secondary school and 10 percent complete secondary education.

During the same event Civil Society for Poverty Reduction Executive Director Patrick Nshindano said repaying the cost of high debt has consequences on ordinary Zambians.

Mr. Nshindano says the crowding out effect of debt on social spending has pushed more citizens into the poverty trap as a result of weak social protection programmes, late disbursement of social cash transfers have become erratic subjecting poor Zambians to hunger and even death.

And speaking on behalf of the Director of Investments and Debt Management at the Ministry of Finance, Assistant Director of Investment and Debt Management Mwila Zulu said the projected annual economic growth of 4 percent remains feasible as there has been an increase in economic activity particularly in the mining, tourism and construction sectors which have been supported by stable power supply.

She said the kwacha has remained relatively stable against major currencies during the first half of the year trading at an average of K9.93 per United States dollar and the reserve position has been maintained at US$1.82 billion.

“The journey that government has embarked on will not be an easy one and any economic achievements that our country has recorded can be wiped away by the adverse impact of unsustainable debt”, she said.

Ms Zulu has since called on all stakeholders to support government as it implements debt reform measures

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