Ministerial Statement made to Parliament on 31st July 2009 by the Minister of Finance and National Planning, Hon. Dr Situmbeko Musokotwane, MP, on the budget performance for the half of the year and inability of the treasury to release adequate resources to ministries, provinces and other spending agencies.
Ministerial Statement from the Minister of Finance on budget performance & inadequate resourses
Friday, 31 July 2009
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There is a lot of data in this report, and the Minister has given us a lot to chew over. There were a couple of things that stood out for me: First, that while tax and tariffs revenues have declined in proportion to related factors like copper prices, reduced trade volumes, and currency market fluctuations, the total project grants and budget support are 1.334 trillion kwacha below the 1.861 trillion that was expected. (The Daily Mail is reporting today that the UK and Finland are making good on 111 billion kwacha of their budget support pledges. Just 1.223 trillion to go!)
ReplyDeleteThe second thing that I noted is that despite the efforts of the MoFNP to cut spending, the government nevertheless must borrow in order to meet its obligations. Over the first two quarters some 555 billion kwacha were borrowed, but previously accumulated debt cost the government 515 billion kwacha in interest payments over the same period. That leaves just 40 billion with which to make investments which can eventually pay off the full 555 billion just borrowed. Another way to put this is that 92.7% of new government borrowing is merely debt service.
There's other small stuff embedded in the numbers, like why "State Functions" are fully 50% over budget (+K7bn) during a period of widespread cutbacks, or why contributions to "State Pension Funds" were 50% under budgeted amounts (-K10bn) over that same period, but these are relatively minor compared to the anticipated yet elusive project grants, budget support or government borrowing practices.