Africa-Press – Zambia. BACKGROUND
1.Article one highlighted that the the income required to fund the 2022 budget would be Zmw 173 million ( US$10.2 billion) compared to the Zmw 120 billion( US$ 6 billion ) of 2021.
2. It was also noted that the money was being sourced from various sources as follows
Income tax Zmw 42.3 billion
Vat and duty Zmw 35.4 billion
Other sources Zmw 21billion
Domestic financing Zmw 24.5 billon
Foreign financing Zmw 49.8 billion
3. It can therefore be summarised that the main contributors to the funding are Revenue collection by ZRA which makes up Zmw 77.7 billion of the income this is arrived at by adding Income tax and Vat and duty ( Zmw 42.3 billion + Zmw 35.4 billion ). And foreign funding of US$ 49.8 billion
4. This ZRA Income is approximately 45% of total income arrived at by dividing as follows (Zmw 77.7 billion divided by Zmw 173 billion)
5. This foreign funding is approximately 29% of total funding required. This is arrived at by dividing Zmw 49.8 billion by Zmw 173 billion.
6. This budget is predicated on the theme of the New Dawn Government of Growth , Job creation and taking development closer to the people and has given a lot of hope to Zambians across all walks of life
7. The question that has frequented the nation’s conscious after the pronouncement of the budget 2022 on Friday October 29 2021 is can the income be realised to support this hope raising budget for Zambia. From my independent assessment the answer is a definite yes.
YES THE INCOME CAN BE AND WILL BE REALISED
1.Clearly ZRA has demonstrated it’s capacity to not only meet it’s targets but actually exceed them. See the article below by ZNBC which shows that in 2021 they have exceeded their targets even under the constraints of the Covid 19 shutdowns and slow downs to the supply chain system. It should therefore be expected that with resumption of economic activities more taxes will be collected. The budget of 2022 on page 4 item 20 shows that the country earned more income than targeted and largely due to the Zra performance on company tax and mineral Royalty tax. The article attached shows that ZRA exceeded the target of Zmw 53 billion(US$3.1 billion) by Zmw 4 billion(US$0.2billion ) reaching a sum of Zmw 57 billion(US$3.4 billion ).
2. The Country’s National income from other revenue sources is consistent and credible to predict on tourism as the Country has game parks and mineral Royalty Tax as the country is endowed with rich mineral resources and is undertaking a process to make productivity from the mining sector even higher.In addition the toll gate system also guarantees the country of the much needed income.
3. Domestic financing has traditionally proved a secure place for most entities through investing their money in Treasury bills
4. Foreign funding is also realisable on programme funding or budget support of Zmw 39.3billion (which is about US$2.3 billion) which is a major component of this funding as good progress and a common framework approach has been undertaken by the Nation with the IMF. The common framework approach is an intiatice put in place by G20 members including Paris club of creditors to support country’s whose national income is not able to sustain it’s costs levels which costs are essential for a country’s development and reduction of poverty. The IMF staff and the Zambian government will agree on the credibility of disclosure of key issues such as national income and debt and will agree on the onward meeting with the various creditors so that a restructure is considered to the debt. The restructure can include interest rate reduction ,extension of loan positions ,refinancing of loan book.The obtaining of the Debt Service Suspension initiative in 2021 and it’s extension is a good indicator of the expectations of a restructure programme being successful . This was signed by Zambian government and the IMF with the approval of the country’s creditors.
5. Foreign funding is also equally based on project funding. Which is about Zmw 8.2billion ( about US$0.5billion) These projects it is assumed are already contracted and post negotiations under the common framework would be expected to start disbursing funding which therefore gives strength that these amounts are realisable
6. Foreign Grants are also expected to be realised as there is clear goodwill and relations with the New Dawn Government under Mr Hakainde Hichilema the President of Zambia and the internation market. This is evidenced by the warm reaction to the Head of state by leaders who are key stakeholders in IMF and the Creditors during the currently being held COP26 conference on climate change in Glasgow United Kingdom.
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