Beyond figures
2010 Budgetary changes
Beyond gures
2010 Budgetary changes
Commentary
Zambia Budget Review1
‘’Enhancing Growth through Competitiveness and
Diversifcation” retained as the theme
Very few proposed tax changes The strategy of the Government continues tobe ‘Enhancing growth throughCompetitiveness and
Diversifcation
Manufacturing and tourism decline...Mining, agricultureand construction grow 5% GDP growthtarget for 2010 Some proposed changes may impact negatively on agriculture and tourismGDP Growth of 4.3% projected
The title/theme of the 2010 budget hasremained the same as that of the 2009address “Enhancing Growth through
Competitiveness and Diversication”.
We hope this is an acknowledgement of
unnished business and a realisation that
the development agenda is a long term
one. It was unrealistic to refocus on an
annual basis without any regard to theactual achievements, as the previous annual
theme changes suggested.
Considering the turbulence in the globaleconomy for the most part of 2009, the
economy performed reasonably well. Theprojected GDP growth rate of 4.3%, or more,far exceeds the 1.3% projected for SubSahara Africa.
However, it is not appropriate to gauge our performance against a rough aggregate
such as the Sub Sahara rate. We should
develop targets based on the resources andother competitive advantages we enjoy as a
nation.In 2009, manufacturing and tourism areprojected to decline by 1% and 15%
respectively, whilst mining, agriculture,and construction are projected to grow by
13.1%, 5.2% and 10% respectively. If theeconomy can grow by 4.3% in a very difcultyear, is the 2010 GDP growth target of 5%
ambitious enough? We believe we should
and can achieve higher rates of growth.
To do that we need to set our prioritiesand then focus and execute them as one
management guru put it. We appear to have
set the priorities and to some extent have
started focusing. Next we have to ensure weexecute relentlessly.
Prior years’ budget addresses have been
dominated by changes in the tax regime.
The 2010 budget differs from prior years inthat there are a few proposed changes to
the tax regime. Considering the changes
introduced in the past two budgets, this isa welcome relief, particularly to the mining
industry. We are not suggesting that the
current tax regime is perfect and does not
need improvement. But as we all know
changes have to be carefully planned and
managed. We are not sure that can be said
of some of the recent changes to the tax
regime.Some of the proposed changes in the 2010
budget address might impact negativelyon two priority sectors: agriculture and
tourism. The increase in the fees payableunder the Lands Act might hinder accessto land. Further, the increase in the excise
duty payable on the diesel will surely
increase the cost of farming. The proposed
tourism levy also has the potential to have
similar counter-productive effect. We urgecircumspection before its introduction.Beyond the gures, we believe the 2010
budget proposals are realistic, albeit a bit
cautious.
Beyond gures
2010 Budgetary changes
Zambia Budget Review2
The Economy
A synopsis of the Zambia economy
Amounts in % Actual 2008 Projection 2009 Revised Estimate 2009 Projection 2010
GDP growth rate 5.8 5 4.3 5Inflation 16.6 10 12 8.0Government bonds 16.7 n/a 16.8 n/aTB rates 17.2 n/a 19.5 n/aBudget Deficit 2.7 2.3 2.5 2.9Domestic borrowing 1.4 1.8 3.0 2.0
n/a – not available
An overview
The global economy has slowly begun toclimb out of the recession with key globalmarkets showing modest growth in the
second half of the year. The Minister
presented the previous budget at the heightof the global recession hence, in the contextof tight global liquidity and a compressed
commodity market. In our budget analysis
in January 2009, we noted that the overallmarket painted a grim picture with:
• Constrained markets negatively
affecting commodity prices;
• low global liquidity reducing the potential
for foreign direct investment in theeconomy; and
• a weakening kwacha and higher foodprices causing ination and reducing thedisposable income of consumers.
The impact of these conditions has been
evidenced by a signicant slowdown in
demand-driven sectors of the economy suchas tourism, manufacturing, wholesale and
retail trade and transport & communication.
The following factors have affected the
economy in the nine months to September
2009:
1 A uctuating Kwacha that started theyear at K4,200 to US$ to a high of K5,800 in February, and a low of K4,600 in September;2 Increasing prices of crude oil from$33 per barrel in January to $69 per barrel in September;3 Reduced donor funding to
Government programmesmainly arising from allegations of misappropriation of funds at the
Ministry of Health;
4 Reduced Government revenues fromtaxes and therefore increased domesticand foreign borrowing; and
Search History:
Result 00 of 00
00 results for result for
p.
More From This User
Notes
Load more
