BORROWING NEEDS FOR THE 2024/2025 FINANCIAL YEAR

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Amb. Emmanuel Mwamba writes:

BORROWING NEEDS FOR THE 2024/2025 FINANCIAL YEAR

Minister of Finance and National Planning, Dr. Situmbeko Musokotwane has requested the Speaker of the National Assembly to urgently recall Parliament to request its approval for more urgent national borrowings.


Musokotwane wants the National Borrowing Plans ( ABP) to be increased upwards.

Musokotwane has already sought two unprecedented supplementary budgets in one fisval year but now wants to borrow more.



The National Assembly approved Government’s plan to borrow K16.3 billion as Net Domestic Financing (NDF) and US $416.33 million from external sources for 2024 in the 2024 Annual Borrowing Plan (ABP) approved in October of 2023.



Following the amendment of the ABP which was approved in July 2024, the NDF for 2024
increased to K21.53 billion, while loans to be contracted from external sources increased to US $907.11 million.



2 DOMESTIC BORROWING

Net Domestic Financing (NDF) remains as earlier projected in the amended 2024
ABP at K22.3 billion. The funds will be raised through the issuance of Treasury bills
and Government bonds in public auctions, or contraction from local Commercial
Banks.



3 EXTERNAL BORROWING

3.1 Approved New External Loans
New external loans approved for contraction in the 2024 financial year amounted to
US $907 million, out of which US$ 150 million was budget support from the African Development Bank (AfDB), US $389,000,000.00 million from the IMF and US $368,109,333.00 project loans. Of this amount US $203.97 million was projected to be disbursed in 2024. (refer to Table)

The 2025 national budget for Zambia was ZMW 217.1 billion, which was a 9% increase from 2024.



The budget was intended to be financed by:
1. Domestic revenue: ZMW 174.2 billion, which includes tax revenue of ZMW 137.4 billion and non-tax revenue of ZMW 36.8 billion.


2. Grants: ZMW 8.1 billion from cooperating partners.

Financing: ZMW 34.7 billion

The budget’s goals included plans that have already collapsed:

a) A GDP growth rate of 6.6%
b) Inflation reduction to 6-8%
c) A budget deficit target of 3.1% of GDP



The major challenges facing Zambia’s 2025 national budget include the ongoing effects of a severe drought, leading to food insecurity (mismanaged by earlier exports of the national maize strategic reserve), loadshedding, and reduced economic growth, the need to manage a large debt burden, balancing social sector spending with infrastructure development, and navigating potential external economic shocks while aiming for ambitious growth targets, all while facing limited resources to address these issues.

Budget crisis looming

ADB has refused to fund Zambia’s concessionary Loans after critical assessment.



IMF cannot release the Loan component if the other money from ADB is not released.
It is imperative ghst Musokotwane gets the approval and adjustments from Parliament.

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