DEBT servicing gobbled a total of K2.86 billion in May, 2020, the highest single disbursement for a government function last month, according to Ministry of Finance data.
And the Ministry of Finance has cautioned that Zambia’s financial resources are now scarce in view of the mounting competing demands and unprecedented challenges brought about by the COVID-19 pandemic.
Meanwhile, the Ministry has commenced the restructuring of the 2020 national budget to fall in line with dwindling government revenues.
In a Treasury statement issued by the Ministry of Finance, Thursday, Secretary to the Treasury Fredson Yamba disclosed that government paid out an unprecedented K2.86 billion in total debt servicing payments last month out of a total of K6.73 billion released to finance developmental and other public service delivery programmes.
This payment represents around 42.5 per cent on a single official government function, way above the K604.92 million that went towards transfers, subsidies, and social benefits, or the K311.13 million that was channelled to infrastructure programmes and rural electrification.
Debt servicing, being the highest single disbursement, equally surpassed the K2.28 billion that went to public sector wages and personal emoluments.
“In May 2020, government released K6.73 billion to finance developmental and other public service delivery programmes. Of this amount, K604.92 million went towards transfers, subsidies, and social benefits, K311.13 million was channelled to infrastructure programmes and rural electrification, while other developmental projects, programmes, and general operations received K677.39 million in total. The government also spent K2.86 billion on debt service and dismantling of arrears. Further, a sum of K2.28 billion went towards the public service wage bill. A sum of K223.15 million from cooperating partners went towards supporting developmental programmes in various sectors,” Yamba stated.
“In line with our commitment to debt reduction, a sum of K1.80 billion was released to cater for scheduled domestic and external debt payments. Further, the Treasury released K858.10 million towards the dismantling of liabilities owed to various suppliers of good and services – in line with the government’s commitment to unlock liquidity so that our people continue to participate in the economy for the good of all. In addition, K200 million was released towards the dismantling of liabilities owed under the compensation and awards facility.”
Yamba also revealed that the Food Reserve Agency (FRA) got 0.37 per cent of the total funds disbursed last month to procure maize, among other grains, while the Social Cash Transfer (SCT) programme received even less.
“Of the K60 million released for subsidies, the FRA got K25 million to procure maize and other grains under the Strategic Food Reserve programme, whilst of K25 million was channelled towards the Farmer Input Support Programme (FISP), and a sum of K10 million was released for the Food Security Pack Programme. In the month under review, government also released K10 million towards the Social Cash Transfer Programme,” Yamba added.
Higher public learning institutions only received a total of K79.1 million, representing a meagre 1.2 per cent of what was disbursed from the budget last month.
“Among the recipients from the K594.92 funding for transfers and subsidies, hospitals got a total of K51.98 million, public universities were given a total of K79.09 million, the payment of chiefs subsidies and retainer’s wages was allocated K11.10 million, and Food Reserve Agency got K6.27 million for their operations,” he said.
And Yamba cautioned that Zambia’s financial resource envelope was now depleted in view of the mounting competing demands and unprecedented challenges brought about by the COVID-19 pandemic.
“The release of funds to recipient Ministries, Provinces, and Agencies comes against a backdrop of competing demands and constrained revenue inflows. The world-wide economic downturn, triggered on the domestic front by severe drought in the 2018/2019 farming season, floods in the 2019/2020 season and the ravaging effects of the on-going COVID-19 pandemic, have been the biggest disrupters to the livelihoods of citizens, the well-being of the local production chain, and the performance of domestic revenue sources. Resources are now scarce,” he bemoaned.
Meanwhile, Yamba announced that restructuring this year’s national budget had commenced amid the COVID-19 crisis to fall in line with falling government revenues.
“Considering the reduction in revenue inflows as a result of the COVID-19 pandemic and other factors, the Ministry of Finance has now embarked on a process of reviewing the 2020 budget. Through this process, planned expenditure will be adjusted in line with revised revenue projections. One of the key outcomes of this process is the containment of the 2020 fiscal deficit within manageable limits. Nonetheless, social spending will remain a priority and will continue to be supported,” stated Yamba.