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2013 Zambian Budget-Delivered to the National Assembly on Friday 12th October, 2012

2013 Zambian Budget-Delivered to the National Assembly on Friday 12th October, 2012

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Published by PMRCZAMBIA
This 2013 Zambian National Budget was presented to the National Assembly on 12th October, 2012 by Finance Minister Alexander Chikwanda MP.
This 2013 Zambian National Budget was presented to the National Assembly on 12th October, 2012 by Finance Minister Alexander Chikwanda MP.

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Published by: PMRCZAMBIA on Oct 15, 2012
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07/11/2013

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 1
2013 BUDGET ADDRESS BY HON. ALEXANDER B. CHIKWANDA, MPMINISTER OF FINANCE, DELIVERED TO THE NATIONAL ASSEMBLY ONFRIDAY 12
TH
OCTOBER, 20121.
 
Mr. Speaker, I beg to move that theHouse do now resolve into Committee of Supply on the Estimates of Revenue andExpenditure for the year 1
st
January 2013 to 31
st
 December 2013 presented to the NationalAssembly in October 2012.
2.
 
Sir, I am the bearer of a message fromHis Excellency the President recommendingfavourable consideration of the motion that Inow lay on the Table.
3.
 
Mr. Speaker, the Patriotic FrontGovernment is dedicated to the veritableadvancement of social justice for all. Thisrequires a complete change of our mind-setsand priorities, both as individuals and as anation. It also requires a structuraltransformation of our economy by developing ahealthy and well educated labour force,developing and maintaining an efficientinfrastructure and exploiting our abundantnatural resources and entrepreneurialopportunities to deliver a vibrant andsustainable economy that raises the quality of life for all.
4.
 
Mr. Speaker, with this vision in mind,my task today is to propose a budget for 2013that will set Zambia on this trajectory tosustainable and inclusive growth, with the focuson expanding opportunities for all and ensuringthe equitable distribution of the tangible benefits of development. The journey willcertainly not be easy or uncontested withdifficult challenges requiring tough choices.These challenges are not insurmountable if wework harder to anchor prosperity and build asolid foundation for posterity.
5.
 
Sir, when we came into office just over a year ago, we promised to transform our country by adopting a more people-centreddevelopment agenda and, by so doing, deliver 
more money in people’s pockets
. Let me statewithout reservation and ambiguity that we aredetermined to deliver on this commitment. Inthis regard, the theme for 
next year’s budget
is
Delivering Inclusive Development andSocial Justice
.
6.
 
Sir, I wish to stress that this will not beachieved simply by promoting handouts. Our fundamental approach is to build a self-reliant people able to sustainably generate money for their own pockets. Mr. Speaker, this is thesurest way of sustainably defeating poverty anddelivering the inalienable rights of liberty andsocial justice for all our people.
7.
 
Mr. Speaker, my address today isdivided in four parts. In the first part, I discussglobal and domestic economic developments in2012 and the outlook for 2013. In Part 2, I
 provide this Government’s
 policy objectives for 2013. In Part 3, I present the 2013 Budget, andconclude my Address in Part 4.
PART IOVERVIEW OF THE GLOBAL ANDDOMESTIC ECONOMY8.
 
Mr. Speaker, global growth in 2012 has been uneven and weak. This is attributable tothe turbulence in the Eurozone, lethargicgrowth in the United States, and a slowdown inthe major emerging markets such as China,India and Brazil. Sir, sluggish growth in theworld economy depressed prices for copper, our major export, while oil and food prices weregenerally higher.
 
 2
9.
 
Sir, growth in Sub-Saharan Africa has been relatively favourable, partly due toincreased trade and investment flows betweenAfrica and key emerging economies and therelative insulation of the region from externalfinancial shocks.
10.
 
Mr. Speaker, despite unfavourableglobal economic conditions, the domesticeconomy has been resilient in 2012 with GrossDomestic Product (GDP) growth estimated at just over 7 percent.
11.
 
Sir, over the last nine months, overall budget performance has been satisfactory, withdomestic revenues and direct budget support being 5.5 percent above target. Totaldomestically financed expenditure was 6 percent lower than programmed, due to lowabsorption capacity mainly in the road sector.The overall deficit is projected not to exceedthe target of 4.3 percent of GDP set for 2012.
12.
 
Sir, monetary policy implementationwas generally appropriate. As at endSeptember, 2012 inflation was 6.6 percentwhile money supply growth was 6.3, both of which were in line with the end year targets.Interest rates, however, remained high despitethe Bank of Zambia lowering very significantlythe statutory and core liquid asset ratios, andintroducing the Policy Rate. Sir, these highinterest rates continue to impose unsalutaryeffects on the economy.
13.
 
Mr. Speaker, in 2012, Governmentmade it mandatory, through a statutoryinstrument, for all domestic transactions to beeffected in Kwacha,
Zambia’s legal tender. I am
glad to report that there has been wide-spreadacceptance of this measure which hascontributed to the stability of the Kwacha.
14.
 
Mr. Speaker, another important policydecision in 2012 was the rebasing of theKwacha. The rebased currency will simplifyfinancial transactions and will become legaltender from 1st January, 2013. I will soon table before this House, the Redenomination of Currency Bill to give effect to this policydecision. I urge all stakeholders in this processto adequately prepare for the transition to usethe rebased currency.
15.
 
Sir, the overall condition and performance of the financial sector wassatisfactory as at end-September 2012. There
was an improvement in the banking sector’s
aggregate capital adequacy and earnings performance, whilst asset quality and liquidityconditions remained stable. Non-bank financialinstitutions also continued to be stable andregistered growth.
16.
 
Mr. Speaker, Zambia is expected torecord a merchandise trade surplus of US$960million this year. Overall export earnings are projected to rise marginally due to significantlyhigher non-traditional export earnings, morethan compensating for lower copper volumesand prices. Non-traditional exports are projected to rise by over 50 percent to US$2.5 billion in 2012 from US$1.6 billion in 2011,with higher exports of maize, electricity, cotton,fresh flowers, burley tobacco and gemstonescontributing to this increase.
17.
 
Mr. Speaker, gross internationalreserves rose to US $2.6 billion as at end-September 2012 from US $2.3 billion at end-December 2011, representing 3.5 months of import cover.
18.
 
Mr. Speaker, I am pleased to report thatwe successfully issued an inaugural 10 year  bond of US $750 million at the most favourable price ever secured in Sub-Saharan Africa for afirst issue. Sir, this reflects the high confidencethe international investor community has for Zambia as a safe and preferred place to invest.The House will be pleased to know that the bond order book climaxed at US$11.9 billionand only prudence and capacity considerationsdetermined the US$750 million cap.
 
 3
19.
 
Sir, as at end-September 2012, our external debt stock, including the proceeds fromthe bond, stood at US $2.47 billion, from US$1.56 billion in 2011. The stock of domesticdebt, including domestic arrears, increased by 8 per cent to K13.7 trillion as at end-August2012, from K12.7 trillion at end-August 2011. Iwish to assure the nation that both our externaland domestic debt stocks remain withinsustainable levels.
PART IIMACROECONOMIC OBJECTIVES, POLICIES AND STRATEGIESFOR 2013 AND THE MEDIUM TERM20.
 
Mr. Speaker, the Government fullyappreciates the myriad needs of our people.They require decent work that providessufficient income to support and feed their families. They require a well staffed andadequately equipped health care andeducational system, and training opportunitiesthat will empower the youth with the skillsneeded for the 21st century. They needimproved access to clean water, goodsanitation, decent housing and food security intheir communities. They also desire a moreresponsive government that allows for moredecision making within their local communities
21.
 
Sir, it is our responsibility, as a people-centred Government, to foster conditions thatwill promote accelerated delivery on these realand noble aspirations.
22.
 
To achieve these aspirations,Government will ensure that the economycontinues its strong performance, but does so by following a more inclusive path where the benefits of growth are more equitably shared. Inthis light, the macroeconomic objectives for 2013 are to:a)
 
achieve real GDP growth of above 7.0 percent; b)
 
attain end-year inflation of no more than6.0 percent;c)
 
achieve domestic revenue of at least 20 percent of GDP;d)
 
limit the overall fiscal deficit to 4.3 percent of GDP, of which domestic borrowing will be 1.5 percent;e)
 
maintain gross international reserves of atleast four months of import cover; andf)
 
create at least 200,000 decent jobs.
Strategy for Growth and Job Creation23.
 
Mr. Speaker, in direct response to highunemployment, low incomes and consequenthigh poverty levels among our people, it is theintention of this action-oriented Government,within its first term of office, to significantlytransform
Zambia’s econom
y, by focusing onsectors with high employment creation potential.
24.
 
In this regard, Government hasformulated a National Strategy for Industrialization and Job Creation, which prioritizes four major areas namely: agriculture;tourism; manufacturing and infrastructuredevelopment. I will now briefly highlight themedium term policies and strategies whichGovernment will implement over the next fiveyears.
 Agriculture and Forestry
25.
 
Mr. Speaker, agriculture is the life bloodfor the majority of our people and itsdevelopment is not merely an aspiration, but animperative. This Government will boost cropand livestock production, and strengthen
agriculture’s forward and backward linkages to
other sectors of the domestic economy, so as toexploit its full development potential.

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