Like a prophet, I said it on Thursday, that Finance Minister, Alexander B Chikwanda is consistent with himself, albeit, negatively, and the poor will remain poor after his K46.7billion budget address to Parliament yesterday. That is what I said and came Friday, Minister Chikwanda continued to impose a two year employment and wage freeze in the public sector, and he is doing it with joy, when he knows that unemployment and 60% poverty prevalent rate are suffocating the nation. Now, ABC has even gone into the household ndiyo plate - cooking oil or butter will sky rocket as he has introduced 259% tax on edible oils. Meanwhile, ABC has become so soft on those able to fly, as the 5% duty on aviation fuel has been deleted, whilst public transport will become more expensive as owners will try to slap fees to compensate for increased taxes. He has conceded his and ZRA incompetence on the mines by introducing mineral royalty tax (to be discussed in detail my next article). I have shown you what ABC’s priorities are in spending, not revenue generation. He is focused on Public Spending (to the exclusion of thousands of civil servants). The first six budgetary items accounting for 75.45% accounting for K17,456.76billion. Top in this bracket is Public Affairs and Summit (38.18%), seconded by Roads Infrastructure (12%). ABC’s 3rd priority is Defence, claiming 6.96% of the budget. Zambia is not at war to prioritise Defence as 3rd on the budget. Perhaprs, ABC anticipates civil revolt for hurtful policies – over commodity prices which will inevitably be hiked by the business community (to cater for taxation) that would hammer the poorest of the poor and would wish to have unhindered total support of the men in uniform. How else could he put defence ahead of education, health and agriculture? On infrastructure allocation, like I prophesied last Thursday, on the eve of the 2015 Budget address, the foreigners, especially the Chinese contractors are smiling. They know that at least $938million will be going to China, this will affect the of the Kwacha, and it is likely that the Kwacha may shoot to over K7 per US Dollar in the First Quarter of 2015, making imports more expensive and pushing the cost of living beyond many people’s reach. All stationary products and services will be more costly – since Zambia imports paper and ink. I expected less money to go to the road sector, which has gobbled so much before, and divert the resources to reducing poverty levels. It is very clear why the road sector has been given 2nd priority – that is where most of the chaps want to make their financial gains, at personal level – through contracts, consultancy, award etc. ABC has raised import tax on the un-denatured spirits by 125% from Zero rate, this will hit hard the SMEs and cross border traders, who contribute over 35% to informal sector employment. The poor, will now be buying cooking edible oils more expensive at K2.20 per kilogramme, upped from the previous K0.85 per kilogramme. This will increase household food insecurity and raise poverty levels. The much talked about Constitution has been relegated to the bottom of the budget, it is last, claiming a paltry 0.06% of the budget. Previously, K44m was apportioned, but this year, after Wynter Kabimba was removed, only K29.26m has been apportioned. I don’t see how Edgar Lungu would push for a Referendum to amend the constitution as there would not be sufficient cash for the exercise. ABC is chocking Zambia’s external debt, pushing Zambia back to the HIPC period. For external and internal debts, ABC has allocated 11.3%. In 2011, Zambia’s external debt was $1.9billion. ABC has pushed this up by 247% amounting to $4,7billion. Zambia has no definite policy on management of public debt. The current debt management practice and principles are mainly defined through the Loans and Guarantees (Authorizations) Act under Cap 366 of the Laws of Zambia. The Act gives authority to Minister of Finance to mobilize resources both internally and externally to support the budget and to finance development projects identified in the National Development Plan. One wonders what priority projects are at Defence Ministry for 2015.
Posted on: Sat, 11 Oct 2014 19:56:54 +0000
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