Zambia’s fiscal trajectory sends jitters

Lusaka ‑ Zambia’s development partners are concerned at the country’s deepening budget deficit and fear that unless various fiscal tractions are resolved, its efforts to fight poverty and meet other social obligations might veer off track.
During a meeting in the capital Lusaka with the ministry of finance officials, the country’s co-operating partners expressed deep concern with the country’s deteriorating fiscal situation.
During the first poverty reduction budget support (PRBS) review meeting for 2013 the co-operating partners, who provide poverty reduction budget support to Zambia, emphasised the need for sound fiscal management, saying it was an extremely important condition for budget support.
The partners said they were concerned the budget deficit was expected to be much higher than planned, with significant gaps this year and next year.
“The fiscal trajectory sends a worrying signal on Zambia’s performance,” said Kevin Quinlan, the head of Department for International Development (DFID), and representative of the co-operating partners.
Quinlan noted that co-operating partners have, however, seen some policy decisions that align well with the goal of reducing poverty this year.
“These include the 2013 budget increases for health and education and front line staff, a doubling of the budget for essential drugs and the removal of costly fuel subsidies that mainly were benefiting wealthier Zambians,” he said.
“On the other hand, in some cases the government decisions can appear to be inconsistent with the goal of tackling poverty. For example, the recent generous wage increases for public sector workers, whose income was already well above the poverty line.”
He said the partners appreciate that the government wants to pay its civil servants decent salaries but the large and mostly unbudgeted cost risks crowding-out resources for programmes targeted at the poor.
“Looking ahead we appreciate that rewards are closely related to returns and so we urge the government to use the recent wage increase to leverage higher performance from the civil servants,” Quinlan said.
On corruption, Quinlan said the co-operating partners appreciate the government’s commitment to combat the vice.
“We also welcome the progress being made with the government’s new strategy for strengthening Public Financial Management, as well as continued implementation of important reform programmes such as the decentralisation of public procurement and human resourcing.
“However, as budget support partners we remain concerned over the deterioration in the credibility and transparency of the budget in recent years and continued challenges with implementing the Integrated Financial Management System (IFMIS),” he said.
“We urge the government to take every effort to return to producing consolidated quarterly budget execution reports in a timely manner and to share these reports with cooperating partners in order to assist the government in monitoring the analysis of the budget execution.”
However, Secretary to the Treasury, Fredson Yamba defended the decisions by the Government arguing that the country’s debt and fiscal deficit positions were within sustained levels.
Yamba said the execution of the 2013 budget was on course despite recording a K900 million (US$173 000) shortfall to finance the K2.5 billion (US$481 233) expenditure budgeted for June 2013.
He also said the government remained committed to the fight against corruption as noted from the strong political will.
There has been a rise in the number of corruption cases being prosecuted in the courts of law, added Yamba.
On peace, human rights, democratic principles and the rule of law, Yamba said the government was cognisant of issues of human rights and has taken measures to address them by signing international treaties on the promotion of human rights.
“Additionally, we have taken steps to revise the Sixth National Development Plan in line with the patriotic Front manifesto,” he said.
The co-operating partners said they shared concerns raised by the Human Rights Commission last week around ongoing infringements of the freedom to assembly of opposition parties. Quinlan said the co-operating partners consider an active and free opposition as an essential element of democracy.
“We are also concerned about recent allegations of constraints of freedom of the media in Zambia,” Quinlan said, adding that the partners have further noted on-going debate on minority rights issues in the country.

August 2013
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