ZIPAR urges Government to keep a keen eye on interest payments and find ways to ensure that these do not adversely affect the country’s efforts to attain fiscal fitness.
During a Town Hall Meeting on the analysis of the quarter one 2018 budget performance on 21st June 2018 at the Intercontinental Hotel in Lusaka, the ZIPAR Executive Director, Dr. Pamela Nakamba-Kabaso noted that high interest payments continued to be the fastest-growing element in the budget, consequently crowding out other critical spending. Interest payments in quarter one 2018 grew by 71% compared to the same period in 2017. For every K1 of domestic revenues collected in quarter one 2018, 36 ngwee was allocated to interest payments during the same period.
“As we assess the performance of the budget in the first quarter this morning, we see that the current trajectory of interest payments already points to an overrun of the allocated budget. In the first three months of 2018, 36% of the apportioned amount in the approved 2018 budget has already been spent”, she observed.
She added that interest payments would be a major source of potential spending overruns and would tend to divert critical resources from frontline services. Therefore, while Government had initiated steps to rein in debt contraction and accumulation, there was a need to ensure that debt contracted henceforth was such that it could pay for itself through high returns on the economy.
And the Minister of Finance, Hon. Margaret Mwanakatwe in a speech read on her behalf by the Secretary to Treasury, Mr. Fredson Yamba acknowledged the fiscal and debt challenges which were impacting on economic growth and other macroeconomic fundamentals.
Hon. Mwanakatwe mentioned that the Government recently completed a debt sustainability analysis which confirmed a need to undertake measures in order to address the issue of debt. She stressed that as the recently announced austerity measures were being implemented support to inclusive economic growth and macroeconomic stability would remain a priority.
And speaking earlier UNICEF Zambia Deputy Representative, Mr. Shadrack Omol underscored the value his organisation placed on the ZIPAR budget analyses policy engagements because national budget management had a direct link with outcomes for children especially the most vulnerable.
The UNICEF Zambia Representative whose organisation has a partnership agreement with ZIPAR to generate solid evidence for improved policy decisions pointed out that the continent, and in particular Zambia, had witnessed a dramatic change in the development financing landscape. While official development assistance (ODA) continued to be an important source of funds, particularly in humanitarian contexts, future development progress for children would rely primarily on domestic financing.
“In this regard, and as highlighted by Member States in the outcome Document of the Third International Conference on Financing for Development – the Addis Ababa Action Agenda (AAAA) – a Government’s capacity to mobilize domestic resources and spend them effectively at national and subnational levels will be fundamental to successfully implement the Sustainable Development Goals (SDGs) and National Development Plans for children”, Mr. Omol stated.
The Town Hall Meeting jointly hosted with the Economics Association of Zambia (EAZ) with support from UNICEF Zambia attracted participants from Government, Private Sector, Civil Society Organisations, Academia, ordinary Zambians, cooperating partners including the IMF Resident Representative, Dr. Alfredo Baldini and World Bank Country Director Dr. Ina-Marlene Ruthenberg.