President Edgar Lungu says government spending in 2020 is expected to rise by approximately K20 billion due to the depreciation of the Kwacha which has in turn raised external debt payments and other foreign based expenditures in light of Covid-19.
In his national address this morning, President Lungu observed that Covid-19 has impacted negatively on day-to-day lives as it has resulted in loss of employment, income, and in some cases, complete closure of business operations. The Head of State explained that at national level, the impact of the pandemic is beginning to manifest fully as revenues will be lower by K20.8 billion arising from the general reduction in economic activity, loss of expected revenue and tax relief measures.
He further said external debt service is expected to rise by K8.7 billion adding that Covid-19 related expenditures have contributed to an increase in government spending.
“To some people, Covid-19 has resulted in loss of employment, loss of income, and in some cases, complete closure of business operations. It has also meant drastic reduction in demand for goods and services as well as a marked drop in imports in view of border restrictions and reduced industrial activities globally.”
“With the projected fall in revenues, against the rising expenditure, coupled with unpredictable external financing, it has become necessary that domestic resources be mobilized to support the fight against Covid-19 and stimulating the local economy,” President Lungu said.
President Lungu stated that this is why government has put in place the K10 billion medium term refinancing facility meant to restructure, refinance or extend credit to businesses and households impacted by covid-19.

Meanwhile, President Lungu said he is happy that commercial banks are now accessing part of the K10 billion to be loaned to entrepreneurs, especially, small and medium enterprises.
He has disclosed that so far, 533 million Kwacha of 1.8 billion Kwacha worth of applications from the banking sector has been approved by the bank of Zambia while applications worth 753 million Kwacha from the non-banking financial sector, are currently under consideration by the central bank.
“That is why my government has decided to issue the Covid-19 bond amounting to K8 billion as a stimulus package to enhance economic activity. Part of the money raised from this bond will be used to pay off the retirees and those on the separate pay roll who have been waiting for their retirement benefits for a long time.”
“In addition, government is so concerned about domestic debt owed to suppliers of goods and services. That is why part of the money from this bond will be used to pay off suppliers of goods and services, including the local contractors. This is a deliberate effort by my government aimed at ploughing back money in our local economy and enhancing economic activity than letting our money go out of the country,” he stated.
The Head of State further says the money realized from the bond will be utilized to support the small and medium enterprises that will not be able to access the K10 billion medium term refinancing facility through commercial banks which is managed by the Bank of Zambia.