EXPLAINING THE CLAIM OF A K22 BILLION NATIONAL BUDGET SURPLUS
By Sean Tembo – PeP President
1. Yesterday President Hakainde Hichilema made an astounding statement that his Government had a budget surplus of K22 billion and was therefore seeking Parliamentary approval for a supplementary budget. This is a grossly misleading statement because a budget surplus and a supplementally budget are two totally different things. The President deliberately tried to mislead the Zambian people.
2. A budget surplus is when Government has generated more money than it has spent in a given budget period and can only be determined at the end of that budget period and not midway through. The fiscal year for Zambia is from 1st January to 31st December, which means that Government can only determine if they recorded a budget surplus or deficit for the year 2022, after 31st December 2022 and not before.
3. The reason a budget surplus or deficit can only be determined after the end of a fiscal year is because when the national budget is developed, there are usually some delays in implementing certain budget activities. For instance, teacher and medical personnel recruitment has been delayed from 1st January 2022 to God knows when. Similarly, the receipt of bailout funds from the International Monetary Fund has equally delayed from 1st January 2022 when the funds were expected to God knows when. Therefore a budget surplus or deficit is only determined for the entire fiscal year and not just a part of it. We are only in July and quite far from December for the Nyudoni to claim a budget surplus. In fact there is nowhere in the world where a Government announced that they have a budget surplus or deficit midway through the fiscal year.
4. On the other hand, a supplementary budget is when Government spends more money than it budgeted for in the original budget, and they then submit a request to Parliament for approval to spend more. This is supposed to happen when there is an unforeseen event in the country such as a pandemic outbreak, or a Cholera outbreak or major floods or a major drought. In other words, something unplanned needs to have happened which gobbled Government funds in order for a supplementary budget to be justified.
5. In the absence of any unforeseen event taking place, a supplementary budget is a sign of poor financial management by Government because it means that Government is paying more for the same goods and services, than it planned during budgeting. If Government pays more for the same goods and services, it means one or both of two things. It could mean that the budgeting was poorly done by underestimating the cost of goods and services which would require to be procured, or it could mean that the implementation of the budget is poorly done by procuring goods and services at a higher price than budgeted or both. Either way, a supplementary budget in the absence of an unforeseen event such as a national disaster, is a sign of poor financial management.
6. Perhaps President Hakainde Hichilema can do us a favor by telling the nation which unforeseen national disaster took place between December 2021 when the nation budget was unveiled and July 2022 when he is seeking a supplementary budget. Without any explanation from the President or his Government, the Zambian people may conclude that perhaps it is him Hakainde Hichilema who is a national disaster to this nation.
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SET 28.07.2022