Consultant and IMCS Limited Proprietor John Kasanga has questioned whether there is actual economic growth stimulus in the 2020 budget because he “had difficulties finding it”.

And Delloite Zambia chief operating officer Humphrey Mulenga has called on government to avoid broad-brush austerity measures as they can lead to recession if not well targeted.

But Finance Minister Dr Bwalya Ng’andu says government will do everything possible to achieve all it sets out to achieve in the 2020 budget, adding, however, that implementation is not always straightforward.

Speaking during the Delloite post budget breakfast meeting, Monday, Kasanga noted that the budget had no clear measures to unlock resources.

“Honorable Minister, I think is very clear, there is one thing that is coming out from your budget that the budget is reliant on government keeping to its macro-economic targets in order to unlock resources and stimulate the economy. There are no other clear measures that explain these but you are simply reliant on government meeting its commitment which is actually very tenuous. The other issue of course related to this is what level of fiscal discipline will be there that will be so central and stops diversion to ensure that the targets are met; we don’t get out of the targets. Now the question is, given the history, how possible is it? Finally, honorable Minister, on the last bullet, I have looked very critically at the budget, can you help us find where the actual economic stimulus lies in the budget, where is that actual stimulus. I had difficulties finding it,” said Kasanga.

“I think the policies are clear on what you are trying to do, the belief that I have is that we require total commitment to limiting expenditure in the budget, the question honorable minister, what’s the historical reference of government’s CV for such level of discipline so far? Do we have examples that this will be done? Being able to stay within the budget, what is the historical reference, so far, never! As earlier indicated, the K2.3 billion for dismantling domestic arrears is an important step to help unlock resources but this is actually just 11.5 percent of what is owed, we have got another 88 percent to be disbursed.”

And Mulenga said Zambia needed specific, measurable austerity measures to avoid recession.

“The announcement of austerity measures is hardly new. This has been a key announcement in the past two or three national budget speeches. What is less clear is government’s assessment on how effective these austerity measures have been. Additionally, it’s important that austerity measures are specific, sufficiently granular and measurable – in short, it’s important that they are strategic and implementable. Clearly, broad-brush austerity measures should be avoided as they could lead to unintended consequences including a recession if they are not well targeted. The other point I would flag is the issue of domestic debt, we haven’t yet done a complete number crunching but we are just keen to understand where the funds will come from, clearly, it’s a good move but we would prefer that the funds, as far as possible, come from the savings of the implementation of austerity measures as opposed to external borrowings,” said Mulenga.

And in response to these concerns, Dr Ng’andu said this budget could be the beginning of a habit change with regards implementation of promises.

“If we don’t do everything that we have said, it’s not because we are not trying or it’s not because we are short of being honest in that approach, it’s just that sometimes things don’t work out the way you expect them to work out. I was clear when I spoke that we have that history of not keeping each and every promise we make but there is all the intention to implement this budget to the best of our ability. Habits change also,” Dr Ng’andu said as the audience laughed.

“So this is the budget that will begin the process of perhaps changing some of these habits but I think there is every intention on our part to implement the budget to the extent that we are able to. I think that the last speaker was just polite but he wanted to say is that government is not implementing what it is saying it’s going to implement. I accept that politeness but what I can tell you is that there is really no intention on the part of government say things which we don’t mean to do, sometimes the reasons are that things we intend to do don’t happen is that there are other issues that kind of get in the way. And also the process of implementation itself is not always as straightforward as it might seem, take for example the commitment to suspending or perhaps completely stopping certain loans that have been contracted, it sounds very straight forward but it’s just a decision that you wake up and make but very often when we contract a loan, there are legal implications to cancelling a loan and what you don’t want to do is to cancel a loan because it fits into the broad definition that it has not been disbursed.”

And Dr Ng’andu said it would be reckless for him to start reducing taxes to increase liquidity given the tight fiscal space he was operating in.

“Mr Kasanga also talked about the stimulus in the budget, and I supposed that by fiscal stimulus, you are looking for me saying that I have reduced tax here, I have reduced tax there, but all of you accept that I have a very limited fiscal space so I think an ultimate act of recklessness would be for me to start doing just that but if you look at what we have said over and over, is that we will begin the process of dismantling the domestic debt and the reason we want to do that is precisely to achieve that end, put money into the economy and get the machinery moving, get the economy to run,” said Dr Ng’andu.

“So if you look also at what we’ve done for the aqua industry, the intention there is to see whether we can generate a little more activity within that area. I think that if we can achieve the reduction in arrears and put more liquidity in the economy, we will be able to see the difference that that will make and I think that is sufficient stimulus for now, next year it will be different obviously because if the measures we are taking produce the positive results we are looking to have then I think we will see some changes.”