By MAIMBOLWA MULIKELELA –
THE Bank of Zambia (BoZ) has called for further fiscal adjustments that will address revenue shortfalls and rationalise expenditure in view of the current budget deficit.
Preliminary indications by the BoZ show that a budget deficit of 1.5 per cent of the Gross Domestic Product (GDP) has been recorded in the first quarter of this year.
To this effect the Central Bank was holding talks with the Ministry of Finance to address the concerns.
The deficit was mainly due to the lower than programmed revenues.
Total revenue and grants were 3.0 per cent lower than programmed as a result of lower non-tax revenues attributed to weak performance in mineral royalty revenues and the non-receipt of grants.

. Dr Kalyalya

Central Bank governor Denny Kalyalya said for the country’s monetary policy to be a strong anchor for macro stability, further fiscal adjustments were necessary to address the current revenue deficits so as to achieve fiscal sustainability.
He said it was critical for the Government to ensure that the adjustments are made to the budget to achieving a stable macroeconomic environment.
“We are in conversation with the Ministry of Finance to see what they can do to try and make the adjustments to the budget in terms the rationalising the expenditure and what can be done in terms of reducing the revenue shortfall,” he said.
Dr Kalyalya said during a press briefing in Lusaka yesterday that total expenditure stood at four per cent which was lower than the programmed amount and this was putting pressure on the financing requirement for the budget from the domestic market.
This was causing yield rates on Government securities to rise.
On the other hand, preliminary data indicated that the overall Balance of Payment (BoP) deficit widened to US$405.2 million from US$131.9 million recorded during the fourth quarter of 2014.
This was largely on account of unfavourable performance in both the current and financial accounts.
He said the current account deficit broadened to US$223.3 million from US$179.6 million was registered the previous quarter, driven by a drop in the surplus on the balance of goods and lower secondary income inflows.
“Non-traditional exports (NTEs)  decreased by 3.3 per cent explained by lower earnings from petroleum products, fresh fruits and vegetables, electrical cables, raw hides and skin, gemstones, cotton , cement and among others,” he said.
Dr Kalyalya said the general decline in the NTEs could be partially attributed to lower global prices, increased local demand for some products and challenges related to value added tax (VAT) refunds.
He said lower donor inflows accounted for the decline in the secondary income account balance by 83.1 per cent.
He said the capital account recorded a 19.8 per cent on account of lower project grants.
The financial account deficit broadened to US$220.5 million from US$1.8 million the previous quarter, following a higher accumulation of investment assets by private sector.
On the other hand, the recent decision by the Government to resolve the 2015 mining tax impasse was likely to help dampen the negative sentiments in the economy and mitigate inflationary pressure.