GOVT VOWS TO WORK “VERY HARD” THIS YEAR TO REDUCE INFLATION
Minister of Finance and National Planning Situmbeko Musokotwane says the government’s principle objective this year is to continue building a stronger economy and achieve the set macroeconomic targets.
Speaking when he reviewed the December 2024 Budget expenditure report, Dr Musokotwane said the government will this year work “very” hard to attain a real GDP growth rate of 6.6%, reduce inflation to the 6-8% target band in the medium-term, maintain international reserves above 3.0 months of import cover and increase domestic revenue to at least 21.3% GDP.
He said government will also reduce the fiscal deficit to 3.1% of GDP and limit net domestic borrowing to 1.9 percent of GDP.
The Minister added that the Memorandums of Understanding signed with France and Saudi Arabia in December last year set the stage for the finalization of an additional 14 agreements with other creditor countries.
Dr Musokotwane said the agreements, currently under negotiation, aim to ensure comprehensive debt treatment that supports Zambia’s economic recovery efforts in 2025, and beyond.
He said public officials need to put their best foot forward by making sure that all necessary steps are taken to implement budgeted programmes and ensure that all sectors of the economy pull together towards building resilience for inclusive growth and improved livelihoods, in 2025 and beyond.
“The fact that 55% of the budget releases for December, 2024, went towards debt service and arrears, is a reminder of the fiscal disaster that would have befallen the nation had we not embarked on the debt restructuring process,” he said.
He added that the country would have been spending over 90% of its monthly budget releases on servicing the debt, thereby leading to a borrowing spiral to meet critical expenditure related to education, health, security, social welfare, and the payment of salaries to public service workers.
“Without debt restructuring, we would never have had any capacity to finance developmental programmes from our domestic resources by now,” he said.
The Minister revealed that in December last year, the Ministry of Finance and National Planning released K23.1 billion for public service delivery, of which K3.9 billion went to the public service wage bill, K12.7 billion was spent on debt service (domestic and external) and arrears, K3.1 billion was released for transfers, subsidies and social benefits, K2.4 billion for implementation of various developmental programmes and general operations, and K1 billion for capital expenditure.