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Zambia 2016 Budget Day

Zambia currently faces numerous developmental challenges that require significant financial resources to be addressed, despite the recently recorded average growth rate of about 6% per annum. As the Minister of Finance Alexander Chikwanda will today present the 2016 budget, ActionAid Zambia hopes government puts in place concrete mechanisms to address growing inequality and to respond to international commitments on the percentage allocated to major social services including education, agriculture and health.

As ActionAid Zambia we are concerned that this high income growth has not resulted in a proportionate reduction in poverty which still remains stubbornly high with a national poverty headcount standing at 60.5% and being much higher in rural areas at 73% of the total population. This rapid economic growth has happened alongside rising income inequality currently standing at 0.65 Gini coefficient.

The country is also currently experiencing other challenges such as a widening fiscal deficit currently standing at 6.5% of the Gross Domestic Product (GDP); trade deficit of over 1.2 billion Kwacha; tax revenues to GDP stagnating at 15% short of the recommended 30%; high depreciation of the kwacha against major international currencies; increasing internal and external debt which is estimated to be currently close to $10 billion accounting for about 32% of GDP; high unemployment rate especially among the youth.

As ActionAid Zambia we are expectant that as the Minister of Finance Alexander Chikwanda will today present the 2016 budget, the government will put in place measures that will generate more revenues through progressive domestic revenue mobilisation and curb the challenges that come as a result of high illicit financial flows not only in Zambia but on the continent as a whole.

Furthermore, we are expectant that the government will prioritise in the 2016 budget progressive spending of the revenue collected to address the widening inequality and challenges the country is facing.

ActionAid Zambia is part of the Zambia Tax Platform, which put together a list of proposals to ensure progressive taxation, progressively spent that were presented to government as part of the pre-budget submission. We are expectant in seeing these areas addressed in the budget including tax compensation measures and tax concession measures, which are detailed in the attached proposal. As the platform, we wait in expectation as to which of these measures are to be taken forward.