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Chikwanda admits but underplays budget deficit

Filed under: Business,Latest News |
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Minister Chikwanda

Minister Chikwanda

The Zambian government has now accepted that they have a deficit in its 2013 National Budget after disputing reports recently.

Minister of Finance Alexander Chikwanda admitted Sunday, August 11, 2013 before the Press in Lusaka but he underplayed the development as normal. admits

“Yes there is a budget deficit but deficits are normal. It happens everywhere and there is nothing strange about it but what it is important is the measures that the treasury will devise to cut the deficit,” said Chikwanda.

Chikwanda who could not specify how much  the value of the deficit attributed the deficit to unbudgeted expenditure. Economic Commentators say puts the deficit at K5 billion.

He also attributed the deficit to a multiplicity of factors such as the huge expenditure on maize purchases by the Food Reserve Agency and the oil import bill before the subsidies on fuel were removed. He also said some funds were used in some projects that are important to the growth of the economy but were not budgeted and needed immediate funding.

The Minister of Finance further said the huge increment in public service wages which will be effected in September has also contributed.

He said the global economic situation has not been very favourable, this has posed a challenge on the revenue side.

“Our projections have not matched our financing requirements,” confessed Chikwanda who was briefing the press on the state of the Economy.

The Minister dismissed assertions that the overrun could been caused by the unbudgeted by-elections. He said By-elections are budgeted for and they are constitutional. But the country has held over 10 by-elections the last 22 months the PF government has been in power which is unprecedented.

He added that the PF government will keep a tight grip on borrowing despite the budget deficit.

Chikwanda said the PF will  not want to over burden the future generations with unsustainable debt levels.

“Our debt to GDP ratio stands at around 5 percent so will don’t want to increase that further,” he said. “We will only go to the bond market at an appropriate time.”

The Finance Minister who was franked by the country’s Central Bank Governor disclosed that he will soon be presenting a Medium Term Expenditure Framework in Parliament which will spell out details on how government will respond to the fiscal challenges in the short to medium term.

Ex-Ministers of Finance Ng’andu Magande and Edith Nawakwi have accused the PF government of failing to manage the budget and the performance of the kwacha against the dollar.

 

 

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