COMMENTS ON THE MEDIUM-TERM BUDGET PLAN 2024-2026

Transcript:COMMENTS ON THE MEDIUM-TERM BUDGET PLAN 2024-2026:
COMMENTS ON THE MEDIUM-TERM BUDGET PLAN 2024-2026 (GREEN PAPER) FOR SUBMISSION TO THE PLANNING AND BUDGETING COMMITTEE CIVIL SOCIETY FOR POVERTY REDUCTION AND JESUIT CENTRE FOR THEOLOGICAL REFLECTION INTRODUCTION This window of consultation on this critical document sits within the interest of CSPR and JCTR in view of our mandate. The two organizations have over the years been working together to monitor the macroeconomic fundamentals, their effects on public service delivery and poverty while advocating for appropriate policy and practice to improve the wellbeing of citizens within the context of a good governance environment. The Zambian economy has been undergoing a lot of challenges due to various factors ranging from both external and internal domestic forces. Various factors have contributed to the low economic performance such as the delayed debt restructuring process with Zambia’s creditors. Zambia’s debt contraction has not materialized into economic growth and growing debt servicing costs have weakened the economy and in turn stifled tax revenue collection. Developments in the Domestic Economy Zambia’s economy is projected to slow down to 2.7% in 2023 from 4.7% recorded in 2022. This has mainly been attributed to the expected reduction in output in the mining and electricity sectors which are expected to contract by 8.7% and 2% respectively. Zambia’s debt restructuring program with creditors was approved in July 2023 after a prolonged delay, which impacted various economic fundamentals such as the exchange rate. This is in addition to the IMF Program’s Extended Credit Facility for economic and financial resurgence, which came with certain conditionalities such as the removal of fuel and agricultural subsidies. The economic environment has been fairly stable, with the annual inflation rate in Zambia eased marginally to 9.8% in June 2023, down from 9.9% in the prior month. This is attributed to price movements of selected food items. The inflation rate recorded in June 2023 is a slight increase from the 9.7% which was recorded in the same period in 2022. The same period in 2021 however recorded a high inflation rate of 24.6%. Annual Food Inflation for June 2023 was recorded at 11.2% compared to 11.6% recorded in the previous month. The reduction in food inflation was attributed to price movements in cereals (maize, samp, cassava meal), meat and vegetables. Developments in the Domestic Economy CONT’D Our analysis presents a notable challenge as the cost of living so far remains out of reach for many and