2023 National Budget expectations high
Published On September 28, 2022 » 2373 Views» By Times Reporter » Business, Columns
 0 stars
Register to vote!

By Kennedy Mupeseni –

AS Finance and National Planning Minister Situmbeko Musokotwane tables the 2023 national budget this week, stakeholders are highly expectant of a positive tax regime and an enabling fiscal year.
In 2022, the Government presented the most ambitious budget of K173 billion in the history of the country.
The Bank of Zambia (BoZ) projections indicates that the economy will grow by 3.1 per cent, four per cent and four per cent in 2022, 2023 and 2024, respectively.
According to the Policy Monitoring and Research Centre, over the period 2019-2021, inflation averaged 9.1 per cent, 15.6 per cent and 22.1 per cent in each of the respective years.
This was well above the six to eight per cent target range envisaged by the Government.
PMRC says in its 2023 budget expectation position paper that the budget will come at a time when the Zambian economy is experiencing an upturn, having experienced positive growth, an appreciation of the Kwacha and a significant reduction in the inflation rate of 9.8 per cent as of August 2022.
However, there remain downside risks to the global and by extension, domestic growth.
Notably, the Russia-Ukraine conflict led to supply disruptions for key commodities such as petroleum products, fertilizers and staple food grains thereby causing an upswing in the commodities.”
PMRC expects the Government to move closer towards allocating at least 10 per cent of the national budget to the agricultural sector in line with the Maputo Declaration to which Zambia is a signatory.
This will ensure harmonisation with international best practice and will be vital in supporting measures such as the development of farming blocks, investment in research and development and agricultural mechanisation.
On the other hand, the PMRC states that the 2023 national budget should have an allocation dedicated to supporting increased participation in African Continental Free Trade Area (AfCFTA) to aid the growth of Zambia’s trade in the medium to long term.
Secondly, PMRC expects an update on the impact of the incentives introduced in the 2022 National Budget to promote the uptake of investment in the industrial yards and multi-facility economic zones.
Their performance must be reviewed, lessons established and a strategic course forward determined.
PMRC expects a significant budgetary increment towards social protection programmes in order to effectively implement the Cash Plus programme while also scaling up other programmes such as the Food Security Pack, the Home- Grown School Feeding Programme and the Girls Education and Women’s Empowerment and Livelihoods (GEWEL) project, among others.
The continuous review and scaling-up of these programmes are imperative to improve targeting and enhance the effectiveness of the programmes in addressing extreme poverty while meeting basic needs.
Increased spending in the provision of social protection will help reduce poverty levels and is in line with aspirations of the Eighth National Development Plan (8NDP) as well as the International Monetary Fund (IMF) to reduce poverty and inequality through increased social spending.
Major highlights of the 2022 budget included the increase of Constituency Development Fund ( CDF) to an unprecedented K25.7 million from K1.6 million in the previous year.
The budget also made possible the historical recruitment of 30,000 teachers and about 11,000 health personnel which has so far been achieved.
On tax matters,Dr Musokotwane announced changes to the Mineral Royalty Tax (MRT) from non-deductible to tax deductible which has resulted in increased investor confidence although some stakeholders feel this incentive will reduce Government revenue at a time when the country is grappling with fiscal challenges.
Other achievements in the 2022 fiscal targets include the clinching of the International Monetary Fund (IMF) US$1.3 million Extended Credit Facility (ECF) which was announced on August 30, 2022.
This will in turn mean the Government will introduce tax changes to meet some of the IMF conditions.
The removal of fuel subsidies through the scrapping of import duty, value added tax and excise duty waivers are highly expected.
Against all odds, Copperbelt University (CBU) Professor of business strategy Biemba Maliti wants a more ambitious budget of more than K200 billion to trigger the much needed economic growth.
“I expect the Government to increase the size of the budget to more than K200 billion to effectively fund agriculture,tourism,manufacturing ,energy and mining among other critical growth sectors of the economy ,” Professor Maliti says.
He says a much bigger budget is needed to allow for more allocations to critical sectors of the economy such agriculture,manufacturing and tourism among others.
“I am an advocate of a bigger budget that allows for economic expansion, we need to fund critical economic sectors so that we create an export oriented economy,” Professor Maliti says.
Measures should be taken to lower the cost of inputs such as fertiliser to reduce the cost of production especially for Small scale farmers whose yields are very low.
“Although the country has less control on the price of inputs like fertilisers, efforts should be made to lower the cost of fertilizers to support production,” Professor Maliti states.
As for the Zambia Association of Manufacturers(ZAM), more tax incentives in the 2023 National Budget to Small and Medium Enterprises (SMEs) in the manufacturing industry to boost industrial activities in the country was needed.
ZAM board member Martin Mutono states that more tax concessions for SMEs are needed to unlock their potential.
“Our main expectations for the 2023 budget is more tax concessions to boost SMEs’ participation in the industrialisation of the country,import duty is very high especially for SMEs doing manufacturing making it difficult for the goods they manufacture to compete favourably with regional peers,” Mr Mutono states.
There is a need to come up with financing models for SMEs coupled with financial literacy awareness to create a robust SME sector that can contribute significantly to the economic turnaround of the country.
Mr Mutono also says penalties imposed by statutory bodies like the National Pension Authority (NAPSA ) need to be relaxed in 2023 going forward because they are counterproductive.
“Small scale players in the manufacturing sector are being affect by punitive penalties especially for NAPSA ,if that can be relaxed so that SMEs have a breather ,it would be better for the industry,” he says.
Coming up with a tax regime which creates a balance in the economy at a time when the Government has embarked on fiscal consolidation and at the same time wants to grow the economy at a fast pace will be a daunting task for Dr Musokotwane.

Share this post

About The Author