By Maimbolwa Mulikelela -Times of Zambia
FINANCE and National Planning Minister Situmbeko Musokotwane is on Friday expected to present a K17.7 trillion 2011 national Budget to Parliament amid high expectations from various sectors of the Zambian economy.
Now that the global economic meltdown is slowly dusting out, Dr Musokotwane is expected to present a national Budget which would spell out the expected revenue and expenditure measures aimed at fostering economic stability next year.
This will be the second time that the Government would be presenting the national Budget ahead of the financial year to ensure that the Budget is implemented over a full 12-month period starting from January next year.
Besides improving Budget execution, the new Budget cycle has so far given an added meaning to Parliament’s paramount role in deciding how public monies are spent.
In the 2010 Budget, Dr Musokotwane has retained the theme “Enhancing Growth through Competitiveness and Diversification” as in the 2009 Budget, an indication of Government’s commitment to the country’s diversification process.
During the course of this year, the macro-economic objectives were to sustain positive growth and maintain macro-economic stability while accelerating the diversification programme to enhance competitiveness of the economy.
For next year, various sectors of the economy expect the Government to sustain the positive growth recorded this year and enhance stability in economy while sustaining the economic diversification efforts.
The Government is expected to sustain the single digit inflation rate as well as ensure a stable exchange rate and also put up measures aimed at stimulating reduction in lending rates among financial lending institutions.
Once implemented, such measures would largely boost growth for the manufacturing sector as well as Small to Medium Enterprises (SMEs) and other business entities in the economy.
Generally, the various economic players expect the Government to announce tax incentives aimed at stimulating growth for their businesses.
Initiatives such as the Citizens Economic Empowerment Commission (CEEC) are expected to continue to involve citizens in development and poverty reduction. The Government is expected to remove the challenges which people face in accessing the funds.
In line with the 2009 and 2010 Budget theme, the Government is expected to continue making the country competitive as well as providing an enabling environment to improve the competitiveness of locally manufactured products.
Thus the Private Sector Development Reforms Programme (PSDP) is expected to continue reducing the cost of doing business in the country.
The Government is expected to generate a lot of employment opportunities and also maintain public debt sustainability.
President Rupiah Banda, in his recent address to Parliament, already set up the tone on what Zambians should expect in next year’s budget.
For instance, President Banda noted that the year 2010 recorded declining domestic tax revenue and continuing high poverty levels and reduced donor support for the health and road sectors. Dr Musokotwane is thus expected to announce measures aimed at mitigating such challenges.
Government will outline various developmental plans to be included in the Six National Development Plan (SNDP) as the Fifth National Development Plan (FNDP) is expected to come to an end this year.
On the social sector strategies, the Government is likely to continue to place high priority on investments in the social sectors such as health, education while water and sanitation allocation of resources is likely to be scaled up.
This is in view of the country’s commitment to attaining the Millennium Development Goals (MDGs) by 2015.
So far, the Zambian economy has performed well and it is expected to grow by 6.6 per cent by the end of this year.
This growth was largely influenced by investment opportunities in the agriculture, mining, construction, manufacturing as well as sharp recovery in the tourism and transport and service sectors.
On mining, the Government is expected to focus on increased mineral production in view of high copper prices on the international market.
Stakeholders have so far raised concerns in relation to the mining tax regime in view of rising copper prices currently hovering above US$7, 000 per tonne.
Thus the mining firms expect Dr Musokotwane to clarify on the tax regime especially if the Government would continue with the current tax system or reintroduce the windfall tax as demanded by the Civil Society Organisations (CSO) and other sections of the economy.
Some experts argue that the Windfall tax would benefit the economy in view of rising copper prices while others feel that the current tax structures which incorporates the corporate, mineral royalty and variable taxes is the best one.
It is also expected that the Ministry of Mines and Mineral Development would be allocated more funds to regulate the mining industry bearing in mind that the ministry would now have more responsibilities to deal with issues of oil and gas exploration.
Current prospecting and drilling activities are revealing opportunities for opening of new mines for gemstones, uranium and coal extraction in Southern Province, nickel in Munali hills, gold and copper in Chongwe and Mumbwa districts, diamonds in Mkushi and Mulyashi, as well as further gold ,oil and manganese exploration, especially in Western, North-Western and Luapula provinces.
In addition, a clear mandate is expected to be set out for the ministry to have capacity to deal with issues of cadastre unit and the mining system.
If this was consolidated, it would make the ministry more efficient as well as remove the overlapping responsibilities with other ministries in particular the Ministry of Commerce, Trade and Industry (MCTI).
It is expected that small scale mining would be regulated to minimise illegal mining activities, increase the revenue base and encourage a system that would allow minerals to be processed within the country.
The Government is expected to strengthen the labour industrial relations in the mining industry and introduce a mechanism that would address some of the work stoppages and loss of production hours.
Local investors expect to be given priority in large-scale mining.
For the agriculture sector, it has continued to trail on the positive trends and it is projected to register growth at 7.7 per cent with the bumper harvest of 2.7 million tonnes compared to 1.8 million tonnes in the previous years.
The total maize production this year has increased by 48 per cent which translates to 908,473 tonnes from the 1.8 million tonnes.
This has helped to push down inflation to single- digit levels with the September inflation hitting 7.7 per cent level mainly attributed to improved supply of food items and non food products.
As President Banda noted, Zambia is expected to sustain agricultural productivity, as the ultimate goal for the country was to become the breadbasket for the southern Africa region.
It is also projected that the Farmer Input Support Programme (FISP) would continue to support small scale farmers with agriculture inputs to back the bumper harvest recorded this year.
Coming from the history of 5.2 per cent growth in the agriculture sector, farmers are looking forward to better marketing strategies to be developed by ensuring that the Food Reserve Agency (FRA) is sufficiently funded to purchase grains.
The Government is expected to allocate more resources for the farm blocs in various areas such as Luena, Serenje and Kawambwa to boost agriculture activities.
In the Livestock sector, more attention is expected to be given to animal control, breeding centres and continue with the creation of the disease Free Zones to facilitate for livestock exports.
For the energy sector, the Government is expected to continue building new hydro-power stations and upgrading existing ones to increase the power generation capacity and ultimately mitigate power deficit in Zambia and in the region.
Another aspect about next year’s Budget is that the Government needs to continue putting more financial resources towards infrastructure development.
Though growth is likely to be sluggish next year, the expansion of the economy would be mainly driven by the construction industry as a result of increased infrastructure development in the energy, mining and road sectors.
It is expected that more funds would be allocated to the construction of infrastructure for the Lusaka South and East Multi-Facility Economic Zones (MFEZ) aimed at increasing linkages and expanding the manufacturing base.
The Public Private Partnerships (PPPs) would be key in addressing infrastructural challenges in the economy.
For the tourism sector, operators expect the Government to allocate funds to develop infrastructure as well as introduce tax incentives to boost the industry.
Already the sector is steadily picking up with preliminary results indicating that the passenger movements at the country’s major airports increased by 17 per cent in the first half of 2010, and the tourism sector is expected to increase tourist arrivals by 3.5 million per year.
It is expected in the Budget that the Government would continue on the same path to transform the Northern Tourism Circuit into a high quality tourism destination.
Resources are expected to be directed towards infrastructure development in areas such as Kasaba Bay, Greater Livingstone Area and also for promoting marketing of tourism products and services as well as improving the major national parks and airports.
The Government has a challenge of allocating more funds to strengthen the capacity of the National Museum Board and Zambia Tourism Board (ZTB) to boost tourism promotion and to revise policies and regulations that impede on the growth of tourism.
The Information and Communication Technology (ICT) sector is also set for a major boost following the introduction of the new ICT Act, the liberation of the International Gateway as well as the sale of 75 per cent shares in Zamtel to Lap green of Libya among others.
For workers, they expect the Government to increase the Pay As You Earn (PAYE) threshold to around K1 million per month as a way of giving tax relief.
In the 2010 Budget, the Government raised the PAYE threshold from K700, 000 to K800,000 per month.
The Government is expected to outline the details of how it hopes to broaden the tax base next year.
In as much as it is practically impossible for the Government to address all submissions that are made prior to any Budget, the various stakeholders are now attentively waiting for Dr Musokotwane to unveil next year’s Budget.
