Zambian Finance Minister Felix Mutati today (Friday) unveiled a K71.6 billion budget for 2018 that gave tax incentives to agriculture, aimed at enhancing domestic revenue collection.
Delivering his second budget speech themed “Accelerating fiscal fitness for sustained inclusive growth, without leaving anyone behind”, Mutati said government’s resolve for inclusive development remains unwavering. He stressed that fiscal prudence will guide the implementation of the proposed expenditure and revenue measures which must help achieve government’s policy objectives.
“In line with the Seventh National Development Plan, the allocations in this budget are targeted at addressing the five strategic areas of economic diversification and job creation, poverty and vulnerability reduction, the reduction of developmental inequalities, enhancing human development and creating a conducive governance environment for a diversified and inclusive economy,” he said.
Government proposes to spend a total of K71.6 billion in 2018, representing 25.9% of the GDP. Of this, K49.1 billion (68.5% of the total budget) will be financed by domestic revenue and K2.4 billion, (about 3.4%) by grants from various partners. The balance of K20.1 billion (28.1% of the budget) will be financed through domestic and external borrowing.
Mutati said the spending plan will likely face hurdles, while it alleviates concerns about accumulating further domestic and external debt. To that effect, a law allowing parliamentary oversight of borrowing, will be introduced.
“Accelerating fiscal fitness is critical for sustained inclusive growth, diversification and job creation. These outcomes conform with the strategic objectives of our national development plan,” he said.
Achieving at least 5% GDP growth, maintaining single digit inflation in the range of 6%-8% and maintaining an international reserve of 90 days of import cover, are among the parameters of success set in the budget.
To accelerate diversification away from dependence on mining, customs duties on various inputs used in the manufacture of stock and fish feed will be scrapped, while unprocessed and semi-processed tobacco will be exempt from 16% VAT.
In addition, a surtax will be imposed on locally produced goods whose coverage will also be extended.
Government will also strengthen various programmes aimed at increasing productivity among small-scale farmers. This includes the implementation of a credit facility and creating an environment to ease access to capital.
On the Farmer Input Support Programme, K1.8 billion has been allocated to help 1 million beneficiaries under the fully-fledged e-voucher system for the 2017/2018 farming season. An additional K1.1 billion has been allocated to the Food Reserve Agency (FRA) to maintain strategic grain reserves at 500 000 tons.
Parliament is scheduled to debate the budget on Wednesday.