Social Economist Kelvin Chisanga’s ‘Expectations of 2023 Zambia’s National Budget!

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By Kelvin Chisanga
Social Economist
+260979305194

The national policy instrument of revenue and expenditure for the fiscal year of 2023 is earmarked strongly to be a private sector centred growth-driven investment, from the look of things the Government is likely presumed to spend an overall figure of around or just within the range of K210 to 216 billion in the upcoming financial year, of which this will represent with an estimated GDP represented between 34% and 40%.

The main key interests likely to encounter, will be the changes in the essential allocations of revenue and expenditures columns on both ends, as it is likely that we may see the general public services reducing with the portion of budgetary share, in a percentage value from the budget share detailed for 2022, though it looks we will have some good features under this category, as we envisaged a strong fortitudes of commitment towards dismantling of domestic arrears, credit supplies and debts services taking a firm groundwork, with a higher portion of commitment under the blanket in terms of value share and quantities. So, the compositions will have very specific and strong focus on domestic debt, dismantling of arrears and local government equalization fund, all these elements put together will remain as the big and main pieces on the bench with this particular section, meanwhile the biggest ticket expenditure will be firmly remain on debt servicing task.

The defense portion for 2023 budgetary allocation might still be maintained at 4.7%, though high possibilities of reducing with a minus or a plus are most likely to prevail, though signs are showing that there will be a reduction in the 2023 fiscus, on one hand as well, we may likely to see the public order and safety to reduce a little bit yet there is an impending employment sitting under the defense, which may seemingly sustain the allocation just within the current running budget tag of 2022.

The 2023 fiscus under the economic affairs will still have budget share hovering within the range of 16.5% to 19.9%, of which this section may be required to cover some empowerment funds for the SMEs, and we equally expect the environmental protection to anchor just around 0.7% or slightly at 1% due to the imminent circumstances of climate dramatic changes affecting food costs and related nutritional security matters.

The housing and community amenities does not look favourable in terms of budget share in the 2023 budget cycle as it faces a small portion cut, especially if you were to compare it against the previous allocations made earlier in the previous budgets, health may likely to receive substantial support, based on transparent trust fund models implored so far, and the sector may also have a good budget allocation of just around 9% of the total GDP to cushion the health gaps and impacts being observed in the entire healthcare.

With free education already in place and playing its cards strongly in the current running budget, there is a likelihood that education might receive an increment based from 2022 budget share of 10.4% to something closer to 14%, though Zambia in the past years has also been seen reducing on the cost of commitment to the education sector in the previous budgets, this key and very important sector has been decreasing since 2015 which does not give much confidence in cultivating best talents and skills required to grow the economy.

However, with the massive support seen so far from the governance system, patterns of policy order and consistency as well as strong ensemble shown on social commitment goals especially with the support of World Bank among many other key stakeholders, the social protection is earmarked to surge up with a small fraction of just about percentage, in comparison to the share value of 2022 budget limit, which had reduced from the 2021 budget allocations.

The main keynote feature largely expected in the upcoming national budget will be a resilient route to be taken in supporting private investment profile, and the headline focus will also be on income and company tax to adjust in order to allow soft landing considering prospects of global recession about to hit in 2023, as we also aim at rebuilding our local economy, and the 2022 budget pronouncements will stick around especially with issues to do with local empowerment schemes among others to allow these key factors, to take full sound effects alongside with the utilizations of constituency development fund (the famous CDF) remaining with the 25.7 million Kwacha margins, though current running system around CDF has shown a low absorption level, and it will also be quite interesting to explore better models of bringing up to the speedy process of fostering outstanding solutions with the CDF and also enhance some easier social and technical mechanisms around it with stiff monitoring and evaluation modalities in order to make it more impactful in assessing of social development achievements thereafter.

The 2023 budget might place government with an investment secured mind around good business or regulatory practices and with a strong need to keep engaging in job creation opportunities (supply and demand policies), tax cuts (incentivizing a steady economic growth pattern) and creating conductive policy environment (predictable policy framework) for businesses and investment to strive, it also calls for maintaining of the current mining tax regime in order to build up on this sector with policy consistent measures, though it might require of us to panel beat a bit in order to fully accommodate and save the small scale miners with the better formula most applicable in the mineral tax royalties band under their class of mineral output.

Under some normal circumstances, given the current prevailing situations coupled with good order governance and right implementative patterns of public policies, it is likely that the 2023 budget if it will work slightly more with accountability, transparency and within the set target policy objectives, I think it will be receiving supplementary support of basically about 10% to 12% from a number of multilateral and bilateral partners in the wake of advancing economic recovery as a balancing wheel.

The monetary and financial performance shows some good features with the current budget of 2022, so it is likely to maintain this path in 2023 as government and key stakeholder should continue to advance on this trajectory, the government should continue to have an inclusive growth focus, strongly driven by working with revisions of personal income tax as well as fostering predictability in corporate taxes, and there is also a solid need to expedite on the repealing of public private partnership Act of 2019 to widen its scope for full participation of various economic agents, and also to work on media reforms in order to enhance wider contribution by many stakeholders, as this will offer some moral responsibility and accountability from both public and private sectors.

It is imperative that we need to sustain the focus of rebuilding the economic recovery process and trigger a steady growth pattern, by continuing to social support as FISP, energy subsidies (with at least 20-25% tax suspension), social cash transfer etc.

On the other side, as a matter of personal view and of course, of peculiar interest, I think it will be ideal for us to fix our eyes on some of the economic leakages that we all see in the forthcoming national budgets, and am sure you may agree with me that Zambia’s yearly national budget performances need to be exposed to thorough evaluations particularly centering on the medium-term projects that may take a duration of 12 months and slightly more in order to make impactful results on the proceeding budgets.

Understanding that Zambia’s national budget has many stages to pass through in order to be finally enacted into the national policy framework, but I have seen a problem sometimes that we don’t fix certain challenges that usually go with executions, as we basically start drawing another budget mid-way whilst the other budget is actively running (around May or June), especially when the other budget is still running without typically assessing the impact or effects of certain policy plans or projects that are enshrined to achieve in accordance with both political lens and governance environment.

However, it is interesting that this week’s budget will be drawn right before debt negotiation could finally settle, and it is also gratifyingly to state that Zambia’s national overall debts portfolio, present such an opportunity to explore with, with a strong focus on unearthing key pillars by deploying monitoring and evaluation mechanism on budget implementative measures and models taken from retrospective sense and from prospective manner too.