Finance Minister Margaret Mwanakatwe says the 2019 budget will be mere rhetoric if it does not receive the much-needed support from Zambians because the country is in a trying period.
And Mwanakatwe complained that she needed a “break” from questions around Zambia’s official debt position.
Speaking during a Deloitte breakfast meeting in Lusaka, Monday, Mwanakatwe, who eventually became emotional as she responded to queries in a bid to defend the 2019 national budget, said the budget is aimed at balancing the books and giving hope to vulnerable Zambians.
Last Friday, Mwanakatwe unveiled a record-breaking K86.8 billion national budget next year, expected to be supported by increased tax revenues amounting to nearly K6 billion more than the 2018 budget.
“It has been a very difficult period. It has been very difficult to construct this budget. Very, very difficult, but we did it. Having done it, what gives me a lot of courage is that, as a Cabinet, we have actually retrieved it to go and cover with the measures that we did. And the ownership around the Cabinet table is total. It is our budget, and it will only work if we put our minds to it. Otherwise, it is rhetoric! We need to get off our rhetoric as Zambians. The budget is doing a very simple thing: it is balancing the books. And that is why it was tough. This budget is ensuring that we are truly protecting the social aspect, the vulnerable. In many areas increase it because the inequalities are many. It was a tough debate. Revenue growth, very critical. We must broaden that revenue base. I was looking for a budget of hope to give people hope because there is so much despondence,” Mwanakatwe lamented yesterday at International Continental Hotel.
And Mwanakatwe said she needed a break from questions around Zambia’s official debt position.
“Hiding debts; I’m not sure whether if you borrowed money from a bank, the bank would not come after you when it’s time to pay. You can’t hide debt; surely, you cannot keep it in a drawer, how? When it’s time to pay, the bank will come after you. So, when we say our external debt is US $9.37 billion as at end of June, that’s exactly what it is. When we say our stock of government securities is K51.8 billion at the end of June, that’s what it is. When we say our domestic arrears at K13.9 billion, that is what they are. Chinese debt of the US $9.4 billion is just between 28 and 30 per cent. ‘Siungabise nkongole, nkongole ungabise sure?’ (Can you hide debt?) Please, please, let us keep telling these people outside and change these perceptions that we are hiding debt. If we had defaulted on the debt, the Eurobond holders would have come after us because there is a cross default, you have defaulted on this and that one. The first Eurobond is due in 2022, four years from now,” Mwanakatwe added.
“The Sinking Fund has begun; only two weeks ago, we were putting US $10 million in the Sinking Fund to get ready for 2022. After that, US $1 billion is due in 2024. So, what’s the hullaballoo? What’s the hullaballoo? How do I default something that’s not due? Please, let’s start speaking positively about ourselves because we only have one Zambia. It’s not an easy period to deal with; what we need to deal with domestically and to be battered continuously internationally. Please, I need a break! And my break will come from you when you start speaking positively about this country, about the things you are doing because you are the ones growing the GDP. You are the ones paying taxes to enable me to pay my debt. If you fail, I fail, so talk positively about these things.”
She also noted that Zambian bonds were performing poorly, and that the kwacha was constantly depreciating because of negative perceptions about the country coming from locals.
“Something you wonder; why the [foreign exchange] rate is going the way it is. It is simply because of one thing; perception. Why is my bond yield out there performing poorly, 16 per cent on the bond yield, Zambian bond, why? Perception. So, start saying good things about yourselves please, ladies and gentlemen. Change your narrative, it is killing us! Why would my bond be yielding at 16 per cent today? If you look at the exchange rate in South Africa right now it has gone down, down, down, but do you hear them talk about it the way we talk about it here in Zambia? No! It’s as if the country is on fire. Are we on fire? We’ve got to change the narrative, I’m a politician. I’m less believable than you, you are more believable, start saying the good things,” appealed Mwanakatwe.
“There is a good story in Zambia, and I need you to tell it more and more. I am going to IMF (International Monetary Fund) on the 5th of October and they are waiting for me. Everybody wants to see me, everybody! And I will tell you what he first question is going to be, debt. And I am ready for them because I have nothing to hide. People are constantly asking me about IMF, even when I came back from meeting them and went to Bauleni compound, they said, ‘Bamayo kwali shani ku ‘IMweF?’ (Mum, how did it go with IMF?) Even Bauleni knows about IMF! There was a question that we are over-taxing a few, I think it is true; we must accept that taxing the formal sector has been a challenge and this is why we want turn-over tax. It’s much easier, much simpler and we hope that more people can come into this tax bracket. We shouldn’t be seen that we are over-taxing the very few.”
To finance the 2019 national budget, government proposed that K56.1 billion will derive from total domestic revenues of which total tax revenues amounting to K46.95 billion are expected to support next year’s budget, which will constitute around 54.1 per cent of the national budget.
Tax revenues anticipated to fund the 2019 budget are up from K41.1 billion announced in the 2018 budget.