On the 11th of November, 2016, Finance Minister Felix Mutati unveiled a K64.5 Billion 2017 national budget, whose focus is to restore fiscal prudence while maintaining an expansion path. Here are a few notable highlights included in the budget:
Part I: Global and Domestic Economic review
- Global economic growth in 2016 is projected at 3.1%, a rate slightly lower than the 3.2% recorded in 2015. This is on account of lower economic activity in the advanced economies. In the emerging and developing economies, growth is projected to strengthen slightly to 4.2% in 2016 from 4.0% in 201 This is despite lower growth in China.
- In Sub-Saharan Africa, growth is projected to fall to 1.4% in 2016 from 3.4% in 2015. This is largely on account of a slowdown in the larger economies of South Africa, Nigeria and Angola.
- World trade is projected to grow by 2.3% in 2016. This is lower than the 2.6% growth recorded in 2015. The main factors weakening world trade include sluggish global economic activity, waning pace of trade liberalisation and the recent increase in protectionist tendencies.
Growth and Inflation
- On the domestic front, the Zambian economy faced a number of challenges. These included low commodity prices including copper, electricity deficits, high inflation, a deteriorated external sector and Government’s challenge to fully finance its commitments. Growth is therefore, projected to be just above 3% in 2016 against a target of 5.0% and to marginally rise to 3.4% in 2017
- Annual inflation declined significantly from a peak of 22.9% in February 2016 to 12.5% in October 2016. Inflation is now expected to fall to single digit by year end. The exchange rate has remained relatively stable.
Economic Recovery Programme
Economic Recovery Programme, ‘Zambia Plus’, is built on five main pillars:
- Enhancing domestic resource mobilisation and refocusing of public spending on core public sector mandates;
- Scaling-up Government’s social protection programmes to shield the most vulnerable in society from negative effects of the programme;
- Improving our economic and fiscal governance by raising the levels of accountability and transparency in the allocation and use of public finances;
- Restoring credibility of the budget by minimising unplanned expenditures and halting the accumulation of arrears; and
- Ensuring greater economic stability, growth and job creation through policy consistency to raise confidence for sustained private sector investment.
This programme will not be achieved in one year, but over the medium term. Download the full Budget Highlights here.