Finance Minister Alexander Chikwanda on Friday presented his budget for 2016 to parliament, a budget aimed at cutting the country's deficit while allocating large sums to energy and healthcare.
In his presentation, Chikwanda said the government planned to cut domestic borrowing to 1.2 percent of GDP, and would try to find external financing with low interest rates.
Zambia's economy is suffering from the sharp fall in the price of copper, exports of which account for 70 percent of GDP. Faced with a decline in tax revenue, Chikwanda said, his aim is to protect the Zambian economy from further external shocks. The Kwacha has fallen 46 percent against the dollar this year.
The minister proposed total spending of K53.14 billion ($4.4 billion), representing 25.8 per cent of the GDP. That is a jump from last year's budget of K46.7 billion ($3.9 billion).
Chikwanda said that the government would narrow the budget deficit to 3.8 percent of gross domestic product next year from 6.9 percent in 2015. He explained that improvements in fiscal policy would be enacted to raise more revenue.
The minister also proposed to spend K4.4 billion ($374 million) on the healthcare with a view to ensuring equitable access to high quality treatment.
The minister also proposed spending K9.1 billion ($772 million) on education and skills development. The allocation includes funds for the recruitment of an additional 5,000 teachers.
Chikwanda proposed to increase the capital allowance for operational expenditure in the generation of electricityto 50 percent from 25 percent.
“This move is aimed at encouraging the development of sustainable and alternative sources of energy. I have also proposed to extend the 10 year period for carrying forward of losses for businesses generating electricityusing hydro and thermal, to businesses generatingelectricity using other sources of energy such as wind and solar.”
But some criticized the proposals as misdirected.
“This budget falls short of our expectations. We expected it to address issues such as the falling standard of living due to the free fall of the kwacha,” Action Aid Zambia executive director Pamela Chisanga told Anadolu Agency in an interview.
Private Sector Development Association president Yusu Dodia told Anadolu agency in an interview that the budget does not address the expectations of the manufacturing industry.
“We thought the minister would pay particular attention to allocating a huge sum to manufacturing. Unfortunately, this has not happened. The situation will remain the same for us as long as the manufacturing industry is not addressed,” he said.
By Francis Maingaila