By Kingsley Jassi:
The 2024-25 budget has gone up marginally by K41.5 billion to K6.04 trillion in what Finance Minister Simplex Chithyola Banda has described as an austerity budget that contains sacrificial measures premised on restoring macro-economic stability.
At the onset, the minister admitted, in his presentation, that the tough macro-economic environment had affected revenue collection while creating demand for more expenditure needs. He was quick to say the authorities exercised restraint, such that they did enough to almost maintain the budget.
In the first six months, the revenue target was missed while expenditure over run, a demonstration of fiscal stress that the minister said is being contained in the revised budget. Most of the initial budget assumptions have been missed at mid-year as growth projection has been revised downwards again—to 1.8 percent from 2.3 percent—while inflation is now projected to average 35.4 percent this year, up from 27.1 percent as earlier project.
At mid-year, total revenue and grants amounted to K1.72 trillion against the projection of K2.22 trillion and the revised end-year projection has grown by K10 billion to K3.39 trillion. On the expenditure side, there has been an outturn of K2.68 trillion, consisting of K2.24 trillion in recurrent expenditure and K438.8 billion in development expenditure.
“The total expenditure at mid-year represented a 14.2 percent variation between the midyear projection and the outturn. This is mainly on account of lower than anticipated rate of implementation of some of the programmes and activities in the first half of the financial year,” the minister said.
Major adjustment in the whole budget include the 468 percent increase of maize purchase expenditure to K124.9 billion, as the development budget has been revised downwards by about K190 billion to K1.58 trillion, but the minister said this did not mean removing any projects as the revision was a result of delayed processes.
In demonstrating the sacrifices, the minister said he had introduced Value Added Tax (VAT) on duty-free imports by privileged persons while those owning unregistered motorcycles would be required to pay a discounted motorcycle registration fee within a four-month window before normal registration fees would be required.
With revenue almost constant from K3.38 trillion to K3.39 trillion, there will be a 6.2 percent increase in grants from K1.17 trillion to K1.24 trillion.
Expenditure lines that have benefitted from the revised budget include wages, which have increased by 18.7 percent from K1.08 trillion to K1.28 trillion, while goods and services’ costs have increased by 10.2 percent from K845.5 trillion to K931.4 trillion.
Overall, despite increased expenditure, Chithyola Banda indicated a narrowed deficit of K1.41 trillion from the approved K1.45 trillion, representing 7.5 percent of gross domestic product.
Revenue is expected to be supported by new avenues, including carbon credits that the minister said had already earned the country $10.5 million while donor inflows were expected to continue on the account of the Extended Credit Facility (ECF) in place, according to Chithyola-Banda.
Speaking at a press briefing soon after he presented the budget, Chithyola Banda and Treasury officials defended the budget, saying it contained enough measures which would be communicated in detail at a later stage.
Secretary to the Treasury Betchani Tchereni said people should not just look at the austerity measures from the aspect of expenditure cuts but also on the revenue side, citing the removal of tax privileges for senior public officials.
Tchereni said amid the growing expenditure needs, there was restraint as seen in the marginal increase of the total budget.
“If we were to incorporate all the funding requests we received, the budget would have gone up by over K10 trillion,” Tchereni said.
Meanwhile, the International Monetary Fund (IMF) has said it would make a response once it scrutinises the budget.
0 Comments