GDP re­bas­ing to cre­ate lat­i­tude for In­fra­struc­ture Debt Fi­nanc­ing

Zambian Business Times - - BUSINESS REVIEW -

Africa’s sec­ond largest cop­per pro­ducer, Zam­bia an­nounced plans to un­der­take a Gross Do­mes­tic Prod­uct – GDP re­bas­ing ex­er­cise in the 2019 fis­cal year.

This was re­vealed dur­ing the bud­get pre­sen­ta­tion and post bud­get dis­cus­sions by ex-banker and cur­rent Fi­nance Min­is­ter, Mar­garet Mwanakatwe.

She stated that “in 2019 Gov­ern­ment would un­der­take an ex­er­cise to re­base the Gross Do­mes­tic Prod­uct, an ex­er­cise last con­ducted in 2012”.

Mwanakatwe fur­ther stated that “the re­bas­ing of GDP will pro­vide re­li­able and up­dated in­for­ma­tion on the cur­rent size and struc­ture of the na­tional econ­omy”.

The Fi­nance Min­is­ter stated that “the re­bas­ing will also pro­vide Gov­ern­ment with an op­por­tu­nity to up­date and de­velop ap­pro­pri­ate so­cial and eco­nomic in­di­ca­tors to mea­sure progress in achiev­ing the ob­jec­tives”

Once re­based, the coun­try’s GDP is ex­pected to expand by over 20%. The cur­rent debt to GDP ra­tio which is mostly used by most gov­ern­ment lenders and mul­ti­lat­eral in­sti­tu­tions like the World Bank and the In­ter­na­tional Mon­e­tary Fund – IMF use is being based on a GDP num­ber last re­based in 2012.

Some of the eco­nomic ar­eas ex­pected to con­trib­ute to the ex­pan­sion of the GDP num­ber for Zam­bia in­cludes the Live­stock and Fish farm­ing eco­nomic sub-sec­tor.

The other no­table sec­tor that has ex­panded mas­sively be­tween 2010 and 2018 is the Roads and Trans­port in­dus­try whose ex­pan­sion has been clearly seen from ex­panded road in­fra­struc­ture and tolls as well as air-traf­fic ex­pan­sion and in­fra­struc­ture.

The last GDP re­bas­ing ex­er­cise in 2012 saw Zam­bia’s gross do­mes­tic prod­uct expand by over 25% af­ter a re­bas­ing ex­er­cise that up­dated the base year from 1994 to 2010 ac­cord­ing to the Cen­tral Sta­tis­tics Of­fice - CSO.

The need for a re­bas­ing ex­er­cise is also im­mi­nent as gov­ern­ment rev­enue has been ex­pand­ing aggressive­ly. A check in the cur­rent bud­get shows that the 2019 bud­get has ex­panded by about 21% year on year.

Zam­bia needs to fund its huge in­fra­struc­ture gap across its ten re­gions/prov­inces. The 2019 bud­get saw the coun­try an­nounce plans to scrap value added tax and re­place it with a sales tax, an ex­er­cise if suc­cess­ful will re­sult in the ad­di­tion of in ex­cess of about USD1- bil­lion an­nual rev­enue to the trea­sury.

Zam­bia’s Fi­nance Min­is­ter Hon­ourable Mar­garet Mwanakatwe

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