Budget Hightlights 2019

The Minister of Finance Margaret Mwanakatwe presented the 2019 national budget in Parliament on Friday, 28th September, 2018. The following are the highlights of the Budget:

Part I: Global and Domestic Economic review

Global Economy

1. 1. Global economic growth in 2018 is projected at 3.9%, compared to 3.7% recorded in 2017.
   2. Growth in advanced economized, led by the USA, projected to grow at 2.4% and growth in
      the emerging economies, estimated at 4.9%, compared to 4.7% in 2007.
   3. Copper prices are projected at US$6,723 in 2018 compared to US$5,827/tonne in 2017.
   4. Crude oil prices average US$71 per barrel in 2018, compared to US$49 per barrel in 2017.

Domestic Economy

Growth and Inflation

1. On the domestic front, the Zambian economy, growth is expected to be above 4.0% from
   3.7% in 2017. This is due to improved performance in mining, construction, manufacturing,
   wholesale and retail trade. However, agriculture has been subdued due to prolonged dry spells.
2. The exchange rate of the Kwacha against the United States Dollar depreciated by 0.9% from
   K10.01 to K10.10 as at August 2018.
3. Inflation was 7.9% in September 2018 from 6.1% in December 2017. Food inflation was the
   key driver, recorded at 8.6% in September 2018 compared to 4.8% in December 2017. Nonfood
   inflation reduced from 7.5% to 7.3% over the same period.

Monetary Performance

1. The policy rate reduced from 12.5% in November 2017 to 9.75% in May 2018.
2. Statutory reserve ratios reduced from 8.0% to 5.0% over the same period.
3. Lending rates declined from 26.7% in December 2017 to 23.5% in August 2018.
4. Credit to private sector remained subdued with growth of 6.7% during the year. Non-performing
   loans were at 11.9% against a prudential threshold of 10%.
5. To address cost of most financial services, Bank of Zambia issued directives to commercial
   banks to do away with unwarranted bank charges and fees.
6. To strengthen legal framework for credit provision, Credit Reporting Act was enacted in July
   2018, for effective functioning of the credit reporting system, and together with the Movable
   Property (Security Interest) Act No. 3 of 2016, should help reduce risks associated with
   economic asymmetries and use of property pledged as collateral.
7. Government has successfully restructured the Intermarket Banking Cooperation (now in
   liquidation) and assets taken over by the Zambia Industrial Commercial Bank.

Download the full Budget Highlights here.