Minister of Finance Dr Bwalya Ng’andu says the K30.6 billion foreign financing and grants allocated in the 2020 national budget should not be misconstrued as new borrowing.
Dr Ng’andu said this in Parliament when he was winding up debate on the motion of supply for the 2020 budget.
He said the 2020 budget was focused on slowing external debt contraction, postponing and cancelling certain pipeline loans and ceasing the issuance of sovereign guarantees in pursuit of fiscal fitness.
“…These measures require that we give some clarity to the K30.6 billion reflected in the budget as external financing and which has been construed as new borrowing. This amount, Mr Speaker, is not additional borrowing, but is mostly disbursements from already contracted loans, which cannot be cancelled or delayed without suffering costs in the form of penalties or giving rise to legal liabilities, which could end up costing the country much more money,” Dr Ng’andu said.
“These resources will continue to finance various development projects and programmes, including the improvement of urban and particularly rural access roads, which are so desperately needed, especially in rural constituencies; completion of hospitals and schools, among others; re-scoping some works in the road sector from bituminous to all-weather gravel roads in order to reduce costs of completing already designated roads; expanding the National Road Tolling Programme, which will constitute the back-bone of the road maintenance programme; completing the expansion and modernization of the Kenneth Kaunda International Airport (KKIA) as part of the effort to make Zambia an air transport hub given its geographical location.”
He added that the increased budget allocation to defence and public security was meant to facilitate the completion of various infrastructural projects and modernize defence equipment.
“The allocation under this head is intended to facilitate the completion of various infrastructural projects, such as housing units for men and women in uniform; modernize their equipment and provide other resources necessary for them to carry out their work and particularly replace obsolete equipment, which is of no use in the face of the complexity of fighting crime and protecting the integrity of this country given the rapid change in technology. In addition, Madam Speaker, funding for these projects will come from disbursements of loans that have already been contracted and not from new borrowings,” Dr Ng’andu stressed.
Dr Ng’andu, the former Bank of Zambia (BoZ) deputy governor, said the 2020 budget had set up measures to reduce dependency on hydro power.
“The budget does respond more specifically to the climate change challenge with a number of measures, which in part, propose to suspend import duty on machinery used for the processing of solid waste to generate electricity and produce organic fertilizers; abolish customs duty on liquefied petroleum gas; increase carbon tax on motor vehicles entering Zambia by 20 per cent; remove VAT on stoves, other gas cookers and gas boilers,” said Dr Ng’andu.