24/02/2024
Minister of Finance and National Planning Dr. Situmbeko Musokotwane today issued a Ministerial Statement on the performance of the economy in Parliament.
The following were highlights:
✅Growth in 2023 was at the rate of 4.3 percent slightly less than the growth of 4.7 percent in 2022.
✅He indicated that since 2021 growth has been consistently positive year after year in contrast with the economic decline of 2.8 percent in 2020.
✅Government is resolved to getting even stronger growth in the coming years as the key strategy for fighting poverty.
✅Copper export earnings as at end of the third quarter of 2023 decreased by 18.96 percent to US$ 5.1 billion from US$ 6.3 billion in the corresponding period of 2022 due to lower export volumes and realised copper prices.
✅The reduction in copper exports was due to a decline in copper output amidst low ore grades, operational challenges and routine closures for maintenance at some mines.
✅The drop of copper exports by almost 19 percent in 2023 was significant and was the most important factor in the depreciation of the Kwacha against other foreign currencies last year.
✅Under the New Dawn Administration, budget credibility has become the hallmark of fiscal operations.
✅Government mobilized revenues and grants amounting to K122.1 billion in 2023, representing an overperformance of 7.7 percent above the budget target of K113.4 billion which has been attributed to over performance from non-tax revenue collections and grants receipts as tax revenue collections were however below target.
✅On the expenditure side, a total of K160.0 billion was released and was 4.4 percent below the target of K167.3 billion. Notable expenses were as follows:
i. Personnel Emoluments at K44.9 billion against a target of K46.5 billion.
ii. Government operations at K13.0 billion against a target of K14.9 billion, of which drugs and other medical suppliers constituted K2.6 billion.
iii. Debt service payments amounted to K41.3 billion against a target of K48.8 billion.
iv. Transfers and Subsidies at K25.7 billion against a target of K25.9 billion, of which K1.8 billion went towards grants to schools, K7.3 billion for the 2022/2023 Farmer Input Support Programme and K4.7 billion for the Constituency Development Fund.
v. Social Benefits at K6.5 billion against a target of K6.4 billion, of which K2.0 billion for the pension financing gap under the Public Service Pension Fund and K3.8 billion for implementation of the Social Cash Transfer Programme.
vi. Arrears clearance at K12.1 billion against a target of K6.8 billion.
vii. K362 million to empowerment funds broadly in line with the target of K362 million.
✅The Minister also provided updates on the exchange rate of the Kwacha, the future of debt restructuring and the financial consequences of the looming drought under the current agricultural season.
✅On the exchange rate, the driver has been the drop-in copper production in 2023, resulting in reduced inflows of foreign exchange. As a measure to remedy the situation, the resumption of production of copper by KCM and MCM, their investments in terms of sending money to Zambia to pay local creditors and prepared to increase production will impact positively on the kwacha.
✅Further both FQM and Barrick Lumwana have invested US$1.2 billion and US$2 billion respectively to achieve enhanced production.
✅Government is also managing monetary policy actions such as those instituted by the Bank of Zambia.
✅On debt restructuring, significant progress has been achieved. All that remains is to complete the formalities which are expected to be signed shortly.
✅On the drought situation which has affected many citizens in the country, Government will adjust the 2024 budget so that finance is created to support vulnerable households.
✅The Minister is optimistic that Zambia’s economy is poised to grow.
Source: M*F
