Africa’s second largest copper producer Zambia today witnessed unveiling of a K178 billion budget themed unlocking economic potential. Finance Minister Situmbeko Musokotwane revealed a 6.5% bigger estimate of revenues and expenditures as he seeks to widen the red metal producers production possibilities amidst reorganization of its fiscal obligations.
Musokotwane faces rising inflation and a debt quagmire for which restructure is in motion. The Southern African nation in principle reached a $6.3 billion debt treatment in June of 2022 however memoranda of understanding are yet to be signed off. This remains critical for success of private creditor negotiations currently ongoing.
The new dawn has signaled a more supply side driven agribusiness support as opposed to demand and price control methodology with the hope of stimulating agriculture production. Zambia’s agriculture production remains sub optimal with only 3.06% contribution to gross domestic production. Musokotwane announced an enhanced agriculture farm block scheme through increased mechanization, improved road and electricity access. Other critical sectors with increased allocations include the SME sectors which will see a wider constituency development fund allocation of K4.8 billion to help absorb the impact of high interest rates and constrained access to finance.
The MinFin tipped Zambians on more developments to come in the mining sector in 2024 which would scale production even higher. The 2024 budget has additionally catered for education and the healthcare sectors through hires of teachers and medical practitioner.
To ease the personal income tax burden on citizens to cushion against rising cost of living, the zero tax band has been lifted to K5,000 while providing several incentives in the renewable energy sector.
Musokotwane announced an ambitious 5.8% budget deficit access for 2023 from prudent expenditure forecast at K157 billion from K167 billion. Recently release trade data reveals very strong non-traditional export growth a reflection of a recovering economy bolstered by telecommunications, education, agriculture and services sectors. Despite growth headwinds forecast in 2023 from mining production plummet, Zambia is expected to expand 4.8% in 2024.
The Kwacha Arbitrageur
