Economist Trevor Hambayi says the K22 billion supplementary budget that President Hakainde Hichilema requested to have added to the 2022 national budget cannot be a surplus because the country is running on a deficit.
Hambayi said the country is failing to finance its own budget as most of it is being financed by debt therefore until a time when the country is able to eliminate a portion of debt; it is not possible to have a surplus.
Speaking in an interview with the Zambian Business Times-ZBT, Hambayi argued that the country is not running to a recession but there is need to make sure that the country has a growing economy by taking recognition of what is happening around the globe.
He explained that even with exceptional financial prudence, it is unlikely that the country would have surplus funds requiring approval to spend under the current economic metrics.
Hambayi added that the K173 billion 2022 budget has a provision for the country to borrow K74.2 billion (K24.5 billion domestics and K49.7 billion external) to finance part 42.8% of the 2022 budget (with K98 billion being 56.6% from coming domestic resources). Therefore, any surplus the country will generate will only reduce the proposed budget debt financing of K74.2 billion.
The Economist mentioned that the country has not been servicing its external debt liabilities since November 2020 when it defaulted on its euro bond coupon payment. As of December 2021, the country had accrued default arrears of USD 1.2 billion and if there has been prudence in resource management, these funds should be reflecting in the country’s resrves.
President Hichilema had instructed the Minister of Finance, Dr. Situmbeko Musokotwane to request parliament to approve a supplementary budget of K22 billion arising from financial prudence. Parliament approved the supplementary budget which brought the 2022 national budget to K195 billion.
The Head of State said the extra-generated revenue would be used to increase funding towards fertiliser support programme, dismantle arrears for suppliers and contractors, payment of retirees and more road construction.
He noted that it was not debt but a surplus as the country has resources and what was missing was prudent management of resources adding that the resources have been allocated to benefit the citizens.
