Government says the delay in sealing the International Monetary Fund package will not affect financing of the 2018 budget.
In a statement, Tuesday, Ministry of Finance Public Relations Head Chileshe Kandeta insisted that that the IMF program was meant to support balance of payments and would therefore not have an impact on the 2018 budget.
“The domestic resource mobilization enhancement measures which are being implemented as part of the 2018 budget, coupled with the stepped-up focus on public-private-partnerships, will be the game changers in the way the government finances development programmes in Zambia. The estimates of revenue and expenditure and the other economic parameters adopted in drawing up the budget for the current fiscal year are premised on domestic resources and confirmed support from some of Zambia’s Cooperating Partners. In this regard, the envisaged support from the International Monetary Fund has not been taken into account in our economic parameters as no programme has been concluded yet,” Kandeta stated.
“The government affirms that by statute, International Monetary Fund support is premised on the provision of *BALANCE OF PAYMENTS SUPPORT through the supply of funds to support national reserves.* IMF support is not intended for budget support thats why it goes straight to the account of the central bank. Therefore, the delay in ascending to a Fund supported programme, regrettable as it may be due to its impact on decision making among some stakeholders, *will not* have a debilitating impact on the budget. To avoid disruptions in its implementation, we have, however, put in place cautious measures and will not rely on parameters that are outside our control.”
Kandeta assured that despite the outbreak of cholera and army worms, government would finance other projects without difficulty.
“I take this opportunity to confirm that despite the contingent demands on the treasury caused by the cholera and army worm’s outbreaks in some parts of the country, the Ministry of Finance has timely financed the payroll and most of the planned projects and operations for January 2018. We will continue to do so for the rest of the year,” he stated.
He stated that government was still optimistic about getting support from the IMF.
“The 2018 budget is skewed towards domestic revenues and confirmed external support. The government, however, remains optimistic that when the support from the International Monetary Fund is finally agreed, the recovery and positive performance that the country is currently experiencing will further be augmented resulting in accelerated recovery and robust growth,” Kandeta stated.
He boasted that the economy had been performing well with rating organizations giving a positive outlook.
“Looking back to 2017, Economic performance was driven largely by positive performance in manufacturing, mining and agriculture sectors, GDP growth continued on a positive trajectory. Inflation was contained within the band of 6-8 percent that was set at the beginning of the year. End year inflation was 6.1%. Budget performance was satisfactory with preliminary numbers showing that the fiscal deficit was 6.1 percent of Gross Domestic Product against a target of 7.0 percent, consistent with fiscal consolidation policies that the government embarked on in 2017 and is continuing with. In the year under review, tax revenues also performed above the budget target by 3 percent. This good performance coupled with government’s measures in transforming economic management have been confirmed by international rating agencies, Moody’s and Standard and Poors, both of whom have in the past few months affirmed their ratings and revised the country’s outlook to stable from negative,” stated Kandeta.
“The Government will in 2018 continue with the economic stabilisation and growth reforms. The process will involve taking fiscal measures to consistently lower the budget deficit until a target of at least 3 percent of GDP is attained by 2020. In this regard, the measures to increase domestic revenue and contain expenditures will remain in force. The economic stabilisation and growth reforms will cover key areas; including expenditure controls, enhancement of tax and non-tax revenue collection through modernisation and automation, strengthening procurement and public financial management systems, and undertaking legal reforms to strengthen institutions of economic, fiscal, and monetary governance. The reforms are also targeted at ensuring that the decision to complete ongoing projects before embarking on new ones is adhered to and that debt sustainability, anchored on fiscal sustainability, becomes a priority to ensure affordability and expenditure within the country’s means are accomplished.”