Economy

Opinion: Austerity Measures Without Fiscal Discipline Will Cause Unnecessary Suffering On Zambians

The irregularities that have been highlighted in the Auditor General’s report for 2017 are a clear indication of lack of fiscal discipline in Public institutions. This is despite the several pronouncements by honourable minister of finance, Felix Mutati, on government’s intention of promoting a solid public finance management system to support fiscal prudence and address structural challenges to stimulate economic growth.

One of the pillars of the “Zambia Plus Economic Recovery Programme”, which government launched in 2016, focused on improving economic and fiscal governance by raising the levels of accountability and transparency in the allocation and use of public finances. It aimed at ensuring that financial misappropriation, irregularities, fraud and corruption are curbed. However, after the successful launch and implementation of this programme, the amount of misapplication of funds has increased by about 500%, Unaccounted for funds have increased by 100%, unretired imprest has increased by about 40% as evidenced by the 2017 Auditor general’s report.

The raft of austerity measures that have been put in place by government are necessary to resolve most of the economic challenges that Zambia is currently facing such as the high unemployment levels, more than 50% of the population living below the poverty line, the weak kwacha against other major tradeable currencies, high interest rates, high cost of living, persistent budget deficits and a high and unsustainable sovereign debt position of $12.5 billion representing more than 50% of our GDP.

Austerity measures such as the removal of subsidies on maize, electricity and fuel should lead to a reduction in government expenditure. This should increase the availability of funds to be channeled to other more productive sectors. The marginal increase in domestic taxes such as PAYE, turnover tax, excise duty etc are supposed to help increase the amount of revenue being generated locally and address these challenges. These measures if properly implemented are also supposed to help in reducing the government appetite to borrow funds both domestically and externally and put as on trajectory towards attaining fiscal consolidation. However, this is almost impossible to achieve because of the lack of fiscal discipline in government ministries and State owned enterprises.

The cost of living has increased in the last 24 months as a result of the implementation of the Zambia Plus Economic Recovery Plan. However, the revenue gains and savings that have been realized from this programme are clearly not being prudently utilized. Unless the irregularities that have been highlighted in the Auditor General’s report are resolved, these austerity measures will not help in the attainment the targets set out in the Economic Stabilization and Growth Programme. The target set out in the 2018 National Budget of “accelerating fiscal fitness for sustained inclusive growth, without leaving anyone behind” will be difficult to achieve. Instead, these measures will just cause unnecessary suffering on Zambians.

Written by Blessings Kafwanka

4 Comments

  1. Marker

    It’s good parliamentarian with have a saying now but teach them the basic economics and abit of polical economics for them to monitor wealth uses and allocation because not everyone understand this.

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  2. Marker

    What is surprising is the controlling officer have been given the powers to even go and sign procurement contract outside the country(Defence)how can you control wrong doing?now let MPs start scrutinise the dealings sooner than later we be talking offshore dealings.am worried look at India how money ministers are involved in paradise paper it can even here.

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  3. Mudolo Ferdinand

    Indeed civil servants are in fact surviving on “Kaloba” and other ” hit and run financial tactics ” mainly due to the Long overdue ” wage freeze” and the eustility financial measures being implemented. Ordinary civil servants and village farmers are truly paying the price. And if the end product shall not be in their favour , what a bloody loss!

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