The governor of the Bank of Zambia (BOZ), Denny Kalyalya, has urged government to scrap the Farmer Input Support Programme (FISP). The cost of the programme increased with K1.8 billion to K2.3billion in the last two years. Kalyalya appeared before the Parliamentary Committee on Budget and Estimates.
He said such expenditure hindered economic development: “This is clearly unsustainable, especially taking into account the low economic growth rates and challenges of raising sufficient domestic revenue.”
‘This is clearly unsustainable, especially taking into account the low economic growth rates’
He told the committee, chaired by Mbala Member of Parliament Mwalimu Simfukwe, that government’s financing of the Food Reserve Agency (FRA) and FISP had consistently overshot their budgetary allocations in the last four years.
He said arrears for FRA also increased to K829 million from K537 million since 2014. “Such huge unplanned expenditures and commitments strained the Treasury and have led to accumulation of arrears,” he said.
Kalyalya said Zambia’s current economic challenges could only be overcome with resolute policy action such as the recent adjustment of fuel prices to cost-reflective levels. He said the intention was to do the same with electricity tariffs.
To curtail the cost of subsidies, he recommended that FISP assistance be limited to no more than three years and a fully operational e-voucher system.
It was also recommended that the operations be down scaled to its initial mandate of ensuring that the nation had strategic grain reserves and leaving the bulk distribution to the private sector. It was also recommended that the FRA’s operations be down scaled.