The Centre for Trade Policy and Development – CTPD has stated that despite the 2020 National Budget having improving allocation towards some sectors, it is full of contradictions as many policy pronouncements are not being supported with spending and tax changes.
The center has expressed concern that the budget has not carried enough matching measures to support the proposed theme: “Focusing sNational Priorities towards Stimulating the Domestic Economy”.
CTPD Executive Director Isaac Mwaipopo has told the Zambian Business Times – ZBT in an interview that government has only improved its assessment of the current economic challenges and pronouncement of measures to be taken but has not translated them into meaningful policy changes and commitments.
Mwaipopo said the general increase in the budget does not reflect a commitment to austerity measures as the K106.0 billion (about US$8.2 billion) is way above the planned expenditure for 2020 in the Medium Term Expenditure Framework.
Meanwhile, he has commended the move to start dismantling domestic arrears of about K20.2 but that there is not target by which government will reduce the domestic arrears as the allocation of K2.3 billion for the year 2020 is less than the increase in domestic arrears of K4.6 billion within the last six months.
“Clearly, there is no real commitment to the dismantling of arrears since the pace of accumulation is greater than the proposed rate of dismantling. CTPD is particularly disheartened that the allocation of K1.2 billion to the sinking fund is insignificant compared to what the country needs to raise annually towards the US$750 million Eurobond principal payment due in 2022,” he said.
The Center has also welcomed the move to maintain VAT and has advised government against the implementation of sales tax, especially to the wholesale and retail sector. Mwaipopo added that this progressive tax change, which has been mingled with proposals to increase non-tax revenue through increased user fees and fines charged by government departments, will negatively affect consumer’s disposable income and would not result in stimulating the domestic economy.
