In a statement outlining the 2019 economic outlook, Mwanakatwe observed that the country faced downside risks to the projected economic growth, which included maintaining the fiscal deficit, weak credit growth and failure to address domestic arrears that may constrain growth, among others.
She explained that domestic arrears owed to contractors and suppliers still stood at over K14 billion by the end of the second quarter of last year.
“Downside risks to growth prospects include continued global trade tension, projected rise in crude oil prices due to continue geopolitical tensions, climate change related effects, and maintaining the fiscal deficit, weak credit growth and any failure to address domestic arrears may constrain growth and delayed implementation of reforms that will support growth,” Mwanakatwe said.
“In 2019, macroeconomic stability is projected to be sustained, aided by continued implementation of reforms and policies to support delivery of fiscal consolidation for sustainable and inclusive growth; robust growth of at least 4 per cent is projected driven by both public and private sector investments, enhanced domestic revenues collection through continued implementation revenue boosting measures, among others.”
Mwanakatwe added that the domestic arrears had continued to trend upwards last year mainly owing to escalating VAT refunds and heavy capital spending in the road sector.
“Despite sustained efforts to dismantle domestic arrears, the figures trended upwards in 2018 mainly due to VAT refunds; and, capital spending – particularly in the road sector. As a result, domestic arrears were K14.7 billion at end of June from K12.7 billion as at close of 2017,” she explained.
On the 2018 budget performance, Mwanakatwe revealed that government expenditure was two per cent above their own target.
“Budget execution in 2018 was broadly in line with annual target despite some fiscal challenges. Expenditure was also above target by 2 per cent, mainly due increase in interest payments on debt and spending on assets. Consequently, fiscal deficit outturn for the year is expected to be around 7 per cent,” stated Mwanakatwe.