Zambia to Revise 2020 Budget as Covid-19 Dents Revenue Inflows


Secretary to the Treasury Fredson Yamba says the Ministry of Finance has begun reviewing the 2020 budget due to reduced revenue inflows because of the Covid-19 pandemic and other factors. The pandemic has caused the government a financing gap of between 20 billion Kwacha (USD1.09 billion) to 29 billion Kwacha this year, which accounts for as much as 40% of planned revenue.

In a statement sent to Timescape on June 4, Mr. Yamba indicated that planned expenditure will be adjusted in line with revised revenue projections.

“One of the key outcomes of this process is the containment of the 2020 fiscal deficit within manageable limits while ensuring that social spending remains a priority and will continue to be supported’.

The 2020 budget was projected at K106 billion (about USD5.8 billion) premised on focusing national priorities towards stimulating the economy. 72 billion kwacha was to be sourced from government revenues while 34 billion would come from other domestic and external sources.

Yet, a large chunk of the money-about 34% of the budget would have to be used in servicing the country’s spiraling debt that has already reached a staggering 95.46% of the GDP.

With Covid-19 having dented foreign revenues from one of the world’s second largest copper producers, President Edgar Lungu is now negotiating debt relief, and the government is making readjustments to the budget.

The world-wide economic  downturn, triggered on the domestic front by severe drought in the 2018/2019 farming season, floods in the 2019/2020 season and the ravaging effects of the on-going Covid-19 pandemic, have been the biggest disrupters to the livelihoods of citizens, the well-being of the local production chain, and the performance of domestic revenue sources. Resources are now scarce…’’ Mr. Yamba said.

The Consumer Unity and Trust Society - CUTS - has urged the government to prioritize low-income consumers as they review the 2020 national budget. CUTS is concerned that the pandemic has had its most negative impact on consumers who have been most hard hit by rising inflation, the depreciation of the Kwacha and job losses.


CUTS Lusaka Researcher Ucizi Ngulube told Timescape that there is a likelihood of an increase in poverty levels and expected demand for social services such as health, education and social protection will increase. 


“In order for the economy to navigate out of this situation CUTS urges the government to undertake a dual approach. It is imperative that the social sector spending is not only ring-fenced but increased to cushion the marginalized that are most hard-hit,” he said.


Mr. Ngulube adds that last year, the national budget was severely compromised as the cumulative spending on debt interest payments and emoluments left less than 10% of domestic revenues available for discretionary spending.


“Already this saw significant cuts in social sector spending. The secondary socio-economic impact of the Covid-19 pandemic in Zambia has further exacerbated the availability of resources for discretionary spending and caused a spike in unplanned expenditures thereby putting the social sector at further risk,” he concluded.


To cope with a crushing debt burden and dwindling revenue inflows, President Lungu has already directed the Ministry of Finance and the Office of the Auditor-General to tighten controls in the application and management of public resources.