Minister of Finance Margaret Mwanakatwe has insisted that the PF government shall not default on any of its debt obligations, adding that to every debt that is being repaid today, a school, health facility, road and market has been built.
And Mwanakatwe says the increase in debt servicing in the 2019 budget is largely driven by infrastructure development projects that government has delivered and is still delivering to Zambians.
Government’s spending on serving external debt has drastically leaped to nearly K15 billion in next year’s budget, more than double the amount of K7.26 billion allocated in the 2018 budget.
But Mwanakatwe defended the increase in debt servicing delivering a statement on the closure of debate on the 2019 budget speech.
“The Honourable members rightfully observed the projected increase in debt servicing in 2019; let me clarify that, this is largely driven by the infrastructure development projects that the government has delivered and still delivering to our people to enhance public service delivery, as well as unlock economic growth in the various sectors,” Mwanakatwe said.
“My colleagues will agree with me that, when the PF government came into power in 2011, this nation had a huge infrastructural deficit. There was, therefore, a serious need to accelerate our investment in this area in order to speed up economic growth. In this regard, this government opted to leverage on resources in the credit market as a quicker, effective model of erecting this much-needed infrastructure.”
She observed that for every debt that was being repaid by government, there was a school and health facility, among other amenities, that had been built, insisting that government would not default on any of its debt obligations.
“In view of the increase in debt service, government has proposed realignment of some expenditures in the short-term in order to ensure fiscal sustainability. Critical expenditures relating to health, education, water and sanitation and social protection, have been safeguarded. This includes, amongst others, grants to facilitate the operations of schools and hospitals, as well as social safety net,” Mwanakatwe added.
And on the increase in this year’s allocation in the defence budget, she observed that one of the most prized possessions Zambia had was its reputation for peace and stability, and that it was cardinal to invest in modern defence equipment.
Government has proposed to increase the Ministry of Defence’s budgetary allocation next year to around K5.1 billion, from K3.5 billion in this year’s budget.
This represents an increase of over K1.5 billion and gobbles around 5.8 per cent of the 2019 national budget, while also more than doubling the allocation for social protection whose funding is only K2.2 billion, down from K2.3 billion allocated in the 2018 budget.
“One of the most prized possessions Zambia has is its reputation for peace and stability. It is cardinal to invest in modern defence equipment to allow the Zambian defence forces to meet the standards required under the UN peace-keeping missions, Mwanakatwe argued.
She said government would continue with institutional capacity-building interventions aimed at modernising tax administration and strengthening tax compliance.
“I have taken note of the various suggestions regarding the need to enhance domestic revenue mobilisation so that our development path is fiscally sustainable. Revenue mobilisation will remain the cornerstone of this government’s inclusive broad-based development. We will continue with institutional capacity-building interventions aimed at modernising tax administration and strengthening tax compliance,” Mwanakatwe said.
And she said government would continue to streamline the tax incentive structure to ensure it was sustainable and well-aligned to their development efforts.
She said it was in that context that she had proposed to abolish customs duty rebase for construction of shopping malls.
“In the same vein, government will continue to streamline the tax incentive structure to ensure it is sustainable and well-aligned to our development efforts. It is in this context that I have proposed to abolish customs duty rebase for construction of shopping malls. We shall also continue to put in place measures that are aimed at addressing profit-shifting and tax base erosion. It is for this reason that I have proposed limitation of interest deduction,” she explained.
And Mwanakatwe said she had no doubt that the revenue measures she had proposed in the 2019 budget presented a win-win solution that would secure maximum benefits for the nation.
“I’m pleased to inform the House that Zambia Revenue Authority has already commenced collaboration with local authorities and independent tax agents to assist with broadening of the tax base to the informal sector. Other initiatives, such as the roll out of land titling, will continue so that we can enhance property taxation, as this is one of the most stable sources of public resources. I have no doubt that the revenue measures I have proposed in the 2019 budget present a win-win solution that will secure maximum benefits for our nation,” said Mwanakatwe.