Zambia’s 2021 Budget Estimates Draw a Mix of Optimism and Skepticism, Experts Term it Unrealistic

The government of Zambia has unveiled its budgetary projections for the year 2021. The estimate stands at 119.6 billion Kwacha (about USD5.99 billion), showing an increase of 13 billion Kwacha (USD651 million) over that of the year 2020.

While presenting the budgetary estimate to Parliament Friday, September 25, the Finance Minister, Bwalya Ng'Andu said the package was aimed at satisfying the government’s current project which is to “Stimulate Economic Recovery and Build Resilience to Safeguard Livelihoods and Protect The Vulnerable”.

 

In the breakdown, the Minister said the 2021 budgetary estimates translate to 32,6% of the country’s GDP. He said 68 billion Kwacha (about USD3.4 billion) of the money would be generated from domestic sources and grants, while the balance of 51.6 billion Kwacha (USD2.58 billion) would be raised through other financing options.

 

Zambia's Minister of Finance, Mr. Bwalya Ngandu presented the 2021 budgetary estimates to Parliament Friday, September 25 

 

Dr. Ng'Andu told Parliament that 57,8 billion Kwacha (about USD2,89 billion) would be spent on recurrent general public services delivery, noting that of that amount, domestic debt interest would account for 18,3 billion Kwacha (about USD916 million) while external debt servicing would consume 27,7 billion Kwacha (USD1,39 billion).

 

In addition, 598.1 million Kwacha (about USD29.9 million) is for the 2021 General Elections while 1.2 billion Kwacha  (about USD60 million) has been allocated to the Local Government Equalization Fund… 2.8 billion Kwacha (about USD1,4 billion) will be spent on the dismantling of arrears owed to suppliers of goods and services as well as personnel. This will help improve liquidity and stimulate economic activity”, Dr. Ng'Andu stipulated.

 

A reading of the remaining allocations reveals that some 13,8 billion Kwacha would be spent on the education sector, with  7,1 billion Kwacha going towards early childhood and primary education, 2,7 billion Kwacha taking care of secondary education and  1,9 billion Kwacha assigned to tertiary education.

 

…to provide for equitable and quality healthcare services, I propose to allocate a total of 9,7 billion Kwacha to the health sector. Out of this amount, 3,2 billion Kwacha is for primary healthcare while 5,1 billion Kwacha is for hospital services. Of the allocations to primary healthcare and hospital services, 1,4 billion is earmarked for the procurement of essential drugs and medical supplies. This amount includes a provision for the Covid-19 vaccine once it is developed and made available”, the Minister emphasized.

 

Following the presentation of the 2021 state budget, the Economic Association of Zambia –EAZ- said its content was decent and does overall reflect the challenges that the country is facing. Speaking on the Zambia National Broadcasting Corporation (ZNBC), the Association President, Dr. Lubinda Habazoka said the budget needed a lot of discipline to implement.

 

I think it is a decent budget that needs the discipline to implement… but it needed to take Covid-19 into consideration, what if the second wave hits us/ then we will have to adjust the figures”, he told ZNBC panellists.

 

Regarding the sources of income, Dr. Lubinda noted that it was good 69% of the resource envelope was expected to be sourced locally but regretted that up to 30% of the package would be sourced from foreign financing. He also felt that “51 billion Kwacha allocated to debt financing is equally worrying, it requires discipline”.

 

Economist Noel Nkoma weighed in on the issue, he told Timescape that the 2021 proposed budget seemed to be a toll, insisting that the projected 2 per cent GDP growth rate forecasted was overly ambitious.

 

“Looking at the current microeconomic fundamentals, it is not achievable because one the mines and many other industries are not doing well, we may say load shedding will end but that is wishful thinking until we see it happen,” Mr. Nkoma opined. He has also questioned where foreign financing was exactly going to come from.

 

Foreign financing from where? IMF, I doubt… further even domestic financing seems a tall order…” he went on.

 

Despite these worries from economists and other stakeholders, the government remained optimistic that structural changes introduced in the 2021 budget would yield the desired results. Therefore the Finance Minister in his presentation to Parliament noted that all ministries, provinces and spending agencies have migrated from activity-based budgeting to output-based budgeting.

 

“This budgeting system is more performance-oriented and enhances transparency and accountability…the allocation of resources in this Budget is based on priority areas identified in the Economic Recovery Programme, which is aligned to the rescoped Seventh National Development Plan and further reflects government response to the Covid-19 pandemic,” Dr. Ng'Andu outlined.