Govt to narrow public service wage bill in 2019 budget projected at K84.6 Bn

Government has projected to roll out a K84.6 billion national budget next year expected to be supported by increased tax revenues amounting to around K7.4 billion more than last year’s budget.

And government has proposed to keep debt interest payments to an average K14.4 billion per annum over the medium-term period (2019-2021), and to narrow the public service wage bill with a cut in recruitment.

According to the government’s Green Paper released last week ahead of the 2019 national budget, a total amount of K84.6 billion is expected to be spent in next year’s budget, up from last year’s K71.6 billion.

Tax revenues amounting to a total of K47.5 billion has been projected to support next year’s budget, representing around 15.8 per cent of Gross Domestic Product (GDP), up from K40.9 billion in last year’s budget, while non-tax revenues are expected to marginally climb to K8.4 billion, up from K8.2 billion last year.

According to the Green Paper, availed by the Ministry of Finance, Zambia’s GDP has been projected to grow to over K300 billion next year, up from K277 billion last year.

Total revenue generation expected for next year’s budget is K55.8 billion, representing 18.6 per cent of GDP, up from last year’s K49.1 billion.

Government is also expected to increase spending on personal emoluments next year to a total of around K25.1 billion, up from last year’s K23.1 billion.

And a detailed breakdown of the Green Paper further shows that government intends to keep a lid on debt interest payments to around K14.4 billion per annum over the medium-term.

“Over the past few years, Government had embarked on an expansionary fiscal policy in order to develop public infrastructure such as roads, health facilities and schools, which was largely financed by both external and domestic borrowing, resulting in increased debt service obligations. To this effect, expenditure on interest payments is projected to average K14.4 billion or 22.5 per cent of domestic revenues per annum, over the medium-term,” the Green Paper states.

This projection, however, is in the wake of government’s higher than projected debt servicing costs for the 2018 national budget.

According to policy think tank, the Zambia Institute for Policy Analysis and Research (ZIPAR), debt servicing costs in this year’s budget were projected to be no more than K6.6 billion for the half-year ending June 30, but government ended up with a total debt servicing cost of K9 billion during the sixth-month period.

And data from ZIPAR also reveals that government actually added US$1.3 billion, or roughly K13 billion, to the total debt stock in just a six-month period between January and June this year.

Meanwhile, the Green Paper further states that government proposes to limit the public service wage bill, which typically gobbles around half the budget.

“Expenditure on personal emoluments as a share of domestic revenues still remains high at 47.1 per cent in 2018, thereby, constraining other developmental expenditures. Therefore, over the medium-term, government will ensure that the public service wage bill, as a share of domestic revenues, is narrowed to not more than 40 per cent by 2021,” states the Green Paper.

“This will be achieved by restricting recruitment to only front-line personnel and ensuring that annual wage adjustments are made in the context of the resource envelope. In this regard, a provision of K808.7 million has been allocated over the medium-term to cater for the recruitment of approximately 15,500 front-line personnel.”

         

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