Bud­get per­for­mance

Daily Nation Newspaper - - HOME NEWS - By SI­MON MUNTEMBA

GOV­ERN­MENT says in­fla­tion has re­mained rel­a­tively sta­ble within the tar­get range of 6-8 per­cent in the first half of 2018.

And Min­is­ter of Fi­nance Mar­garet Mwanakatwe has said that ex­ter­nal debt stock as at end-June 2018 was US$9.4 bil­lion, rep­re­sent­ing 34.7 per­cent of GDP from US$8.7 bil­lion as at end-De­cem­ber 2017. Speak­ing dur­ing her maiden bud­get pre­sen­ta­tion of the 2019 to the Na­tional Assem­bly in Lusaka yes­ter­day, Ms Mwanakatwe said the pol­icy rate was re­duced to 9.75 per­cent in May 2018 from 12.5 per­cent in No­vem­ber 2017. “In­fla­tion is 7.9 per­cent in Septem­ber 2018 from 6.1 per­cent in De­cem­ber 2017. Food in­fla­tion was the key driver of the in­crease and was recorded at 8.6 per­cent in Septem­ber 2018 com­pared to 4.8 per­cent in De­cem­ber 2017,” she said. She said over the same pe­riod, the statu­tory re­serve ra­tio was re­duced to 5.0 per­cent from 8.0 per­cent adding that non-food in­fla­tion re­duced to 7.3 per­cent from 7.5 per­cent. Ms Mwanakatwe also said im­ple­men­ta­tion of mon­e­tary and su­per­vi­sory poli­cies by the Bank of Zam­bia con­tin­ued to fo­cus on con­tain­ing in­fla­tion within the tar­get band of 6-8 per­cent, strength­en­ing the re­silience of the fi­nan­cial sec­tor and sup­port­ing eco­nomic ac­tiv­ity. “Sir, the stock of do­mes­tic debt in the form of Gov­ern­ment se­cu­ri­ties amounted to K51.9 bil­lion as at end June 2018 rep­re­sent­ing 19.2 per­cent of GDP, com­pared to K48.4 bil­lion as at end-De­cem­ber 2017. Do­mes­tic ar­rears amounted to K13.9 bil­lion by end-March 2018 from K12.7 bil­lion as at end De­cem­ber 2017,” she stated. Con­se­quently, she said, the bud­get deficit was es­ti­mated at 7.4 per­cent of GDP against the tar­get of 6.1 per­cent. On debt Po­si­tion, Ms Mwanakatwe said Gov­ern­ment’s ex­ter­nal debt stock as at end-June 2018 was US$9.4 bil­lion, rep­re­sent­ing 34.7 per­cent of GDP from US$8.7 bil­lion as at end-De­cem­ber 2017. She ex­plained that the in­crease was on ac­count of dis­burse­ments on ex­ist­ing loans and that the to­tal stock of Gov­ern­ment guar­an­teed debt stood at US$1.2 bil­lion as at end-June 2018. The Min­is­ter said the over­all rev­enue and grants for 2018 were ex­pected to be broadly in line with the 2018 Bud­get pro­jec­tions. She, how­ever, said ex­pen­di­tures were pro­jected to be higher on ac­count of higher in­ter­est pay­ments and project loan dis­burse­ments. “Mr. Speaker, fol­low­ing the eas­ing of mon­e­tary pol­icy, lend­ing rates de­clined to an av­er­age of 23.5 per­cent in Au­gust 2018 from an av­er­age of 26.7 per­cent in De­cem­ber 2017.

“These rates, how­ever, re­main too high to sup­port pri­vate sec­tor growth. Con­se­quently, do­mes­tic credit to the pri­vate sec­tor re­mained rel­a­tively sub­dued, with growth of 6.7 per­cent dur­ing the year to Au­gust 2018. Non­per­form­ing loans, at 11.9 per­cent as at end-Au­gust 2018, re­mained above the pru­den­tial thresh­old of 10 per­cent,’ she said. She said Gov­ern­ment has been con­cerned with the high cost of most fi­nan­cial ser­vices which has been on strain­ing busi­ness ex­pan­sion as well as fi­nan­cial in­clu­sion. To ad­dress this, she ex­plained, the Bank of Zam­bia, in Au­gust 2018, is­sued di­rec­tives to do away with un­war­ranted bank charges and fees. “Mr. Speaker, in an ef­fort to strengthen the le­gal frame­work for credit pro­vi­sion, the Credit Re­port­ing Act was en­acted in July 2018, ” Ms Mwanakatwe said.

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