|Finance minister Stumbeko
Musokotwane on arrival at the National Assembly of Zambia for 2010 budget
presentation on Oct 8,2010.—The
Cooperating partners have
reduced their grant contributions to Zambia's national budget for 2011 by
almost half to only 7.7 per cent compared to 14.5 per cent for this
And the government has allocated K244.6 billion for the holding of
next year's tripartite elections.
Meanwhile, finance and national
planning minister Situmbeko Musokotwane admitted that there was continued
absence of commitments from cooperating partners in the health
Unveiling the 2011 national budget worth K20.5 trillion under the
theme: "A people's budget, from a people's government," in the National Assembly
in Lusaka yesterday, Dr Musokotwane said over the last 10 years, the government
had increasingly relied on domestic resources to finance the national budget and
would continue on that path.
"We remain committed to paying our own way
in the world. Sir, K15, 769.1 billion, about K15.76 trillion or 76.8 per cent of
the budget, will come from domestic revenues and K1, 587.7 billion about K1.58
trillion or 7.7 per cent through grants from our cooperating partners," Dr
Musokotwane said. "The deficit of K3, 180.6 billion about K3.2 trillion or 15.5
per cent will be financed through domestic borrowing of K1,219.8 billion about
K1.2 trillion and external borrowing of K1, 960.8 billion about K1.9
Going by Dr Musokotwane's figures, the donors' grant
contribution has been reduced by over K1 trillion and foreign borrowing
increased threefold compared to figures in the 2010 budget.
the 2010 national budget, which he presented last year, Dr Musokotwane had said:
"The government proposes to spend K16,717.8 billion or 22.5 percent of GDP in
2010. To finance these expenditures, the government will raise domestic revenues
of K12,107.0 billion representing 72.4 percent of the budget and expects to
receive grants from our Cooperating Partners amounting to K2,426.7 billion or
14.5 per cent of the budget. The balance of K2,184.1 billion or 13.1 per cent
will be financed through domestic borrowing of K1,487.0 billion and foreign
borrowing of K697.1 billion."
In the 2011 budget, Dr Musokotwane said
expenditure on general public service would be reduced to below 30 per cent for
the first time while expenditure on economic affairs, health and education had
been increased and would account for over half of the budget.
allocation to the general public services amounts to K5,855.5 billion or 28.5
per cent of the budget. Of this, K1, 665.3 billion will be used to service
domestic and external debt," he said.
"I have also allocated K244.6
billion for the holding of elections. In addition, K146.2 billion has been
provided for grants to local authorities and K108 billion for constituency
development fund (CDF)."
Dr Musokotwane allocated K3.5 billion for the
preparation of sector devolution, which will commence in 2012, following the
approval of the decentralisation implementation plan in 2009.
agriculture sector, Dr Musokotwane said the government would continue to help
farmers to increase output, productivity and incomes.
“Drawing on the
successes of the Farmer Input Support Programme in 2010, I have increased the
allocation to the programme to K485 billion in 2011 from K435 billion in 2010,”
Dr Musokotwane said.
However, a check in the 2010 budget speech shows Dr
Musokotwane had said: “I have allocated K430 billion for the Farmer Input
Support programme in 2010.”
Further, Dr Musokotwane said the increment to
the Farmer Input Support Programme (FISP) in 2011 would make farmers deliver
even a higher harvest in 2012 compared to the historic 2.8 million metric tonnes
of maize in the 2009/2010 agricultural season.
Dr Musokotwane said
sustaining bumper harvests required the strengthening of marketing arrangements
to avoid wastage and losses to farmers.
“To continue with our efforts to
support farmers in far flung areas of the country and to guarantee national food
security, I have allocated K150 billion for the Food Reserve Agency in 2011,” he
Dr Musokotwane said he had increased allocation for the Food
security pack programme by 50 per cent to K15 billion in 2011.
allocated K13.3 billion to agricultural extension services and K37.2 billion for
the construction of dams, irrigation projects and training of small-scale
farmers to enhance irrigation farming.
Dr Musokotwane allocated K1.5
billion for construction of a bridge and preparatory works at Luena farm block
in Luapula Province and K261.8 billion to livestock and fisheries programmes,
which he said had tremendous potential to create jobs and serve as a source of
diversified economic growth and export earnings.
Dr Musokotwane said in
an effort to reduce animal diseases through creation of disease-free zones, the
government would construct livestock service centres in five districts in
Northern Province, four districts in Soutehrn Province, two districts each in
Central and Western Provinces and one each in North-Western and Eastern
Provinces as well as construction of disease checkpoints across the country, and
purchase vaccines in 2011.
“For these activities, I have allocated K26.6
billion in 2011. In addition, K21.8 billion has been provided for fish breeding
and aquaculture extension services,” he said.
In tourism sector, Dr
Musokotwane allocated K12.8 billion for marketing Zambia’s tourism sites and
K37.7 billion for the development of roads and infrastructure in Kafue National
Park, development of Lusaka National Park and creation of a tourism one-stop
shop facility and K1.1 billion for upgrading permanent exhibitions at Lusaka
In the energy sector, Dr Musokotwane said power would be
very important for the growth of Zambia’s economy and the government was working
on increasing power production output.
He increased allocation to the
Rural Electrification Programme to K314.3 billion in 2011 from K234.7 billion in
2010 to spur rural development, adding that the government would develop
mini-hydro power stations and extend access to rural areas to open them to
investments and reduce the rural-urban divide.
In the transport and
communication sector, Dr Musokotwane said he had increased allocation to the
road and infrastructure development to about K3 trillion in 2011 from about K1.4
trillion in 2010.
He said the Rural Road Unit had been allocated K6
billion and K28.4 billion for rehabilitation and upgrading of airports and
airstrips including at Kasaba Bay, Mansa, Kasama and Mongu.
allocation to the transport and communication sector amounting to K3, 327.9
billion is historic and unprecedented,” Dr Musokotwane said.
education and skills development sector, Dr Musokotwane said he allocated about
K3.8 trillion to the sector, representing 18.6 per cent of the budget.
that amount, the government allocated K444.2 billion for building high and basic
schools across the country and K36.5 billion for the construction and
rehabilitation of training institutes and research centres.
“In 2011, the
government will recruit 5,000 teachers, for which a provision of K131.6 billion
has been made. Another K46.4 billion has been provided for the procurement of
desks and learning materials,” he said. “We provided K159.9 billion towards the
dismantling of personal-related arrears to our teachers and
In the health sector, Dr Musokotwane said the government
continued to invest in infrastructure and human resources.
continued absence of commitments from cooperating partners in the health sector,
I have increased the allocation of domestic resources to the health sector by
30.1 per cent. In 2011, I have allocated K1,772.9 billion about K1.77 trillion
to the sector compared to K1,362.5 billion about K1.36 trillion in 2010. This is
a demonstration of our resolute commitment to ensuring that service delivery is
not compromised at our health posts, health centres and hospitals,” said Dr
He said the government would recruit 1,700 health personnel
that include doctors, nurses and other essential medical staff at a cost of
K52.7 billion, while K37.5 billion had been allocated for procurement of medical
He said K117.8 billion had been allocated for the procurement
of essential drugs and medical supplies, of which K23.1 billion was for
anti-retro-viral medication and K11.5 billion for vaccines and
In water and sanitation, Dr Musokotwane said K555 billion
had been allocated for construction of boreholes, repair water reticulation
systems and pit latrines in a bid to meet Millennium Development Goals
He allocated K919 billion towards public order and safety
On social protection, Dr Musokotwane said government
allocated K547.5 billion for retirees.
Dr Musokotwane said he had
allocated K76 billion for empowerment funds, of which K10 billion was for
youths, K26 billion for women and remaining K40 billion had been allocated to
the Citizens Economic Empowerment Fund (CEEF).
Dr Musokotwane said the
government was firmly committed to providing relief to workers and had,
therefore, proposed to increase Pay-As-You-Earn (PAYE) exempt threshold by 25
per cent or K800,000 to K1 million per month.
“Proposed PAYE System:-
Income band K1,000,000 and below tax rate zero percent; K1,001,000 to K1,735,000
per month tax rate 25 percent; K1,735,001 to K4,200,000 per month tax rate 30
per cent,” he said. “I propose to provide further relief by: (a) increasing the
exempt portion of income paid at termination of employment from K25 million to
K35 million; and (b) increasing the tax credit for differently-abled persons
from K1.92 million to K3 million per annum.”
Dr Musokotwane zero-rated
value added tax (VAT) on hammer mills and standard-rated property and casualty
insurance, fee-based banking services such as manager/bank cheques, drafts and
transfer and excess withdrawal fees.
“These two measures will result in a
revenue gain of K109.9 billion,” he said. “All VAT measures will come into
effect on 1st January, 2011.”
He removed customs duty on electricity and
fire-fighting equipment but introduced customs duty of 15 percent on deformed
bars and galvanised cold-rolled coils, hoping to raise K1.6 billion.
Musokotwane observed that most shops give free plastic bags to shoppers, which
harm the environment.
He said he had introduced an excise duty on plastic
bags at the rate of 10 per cent to promote environmentally friendly behaviour
and discourage the use of plastic bags.
“This will not apply to paper
bags which are biodegradable,” Dr Musokotwane explained.
charges are one of the main sources of financing for road maintenance under the
Road Sector Investment Plan. Current charges, however, are too low to
meaningfully contribute to the cost of road maintenance. I therefore propose to
increase one of these charges, the motor vehicle licence fee, by 50 per cent.
This measure will raise K40.7 billion and will take effect on 1st January,