Thu, 24 Nov 2016 12:43:19 +0000
EXPENDITURE pressure which may arise next year should not derail Government from its well-meaning fiscal consolidation measures essential for sustainable inclusive growth, says economist Professor Oliver Saasa.
Prof Saasa said Government’s decision to restrict new capital projects and major equipment procurement until all on-going projects were completed, in the 2017 national Budget, was a step in the right direction.
“In the past, new projects, programmes or structures, including new districts, were created outside Parliament approved Budget, which has significantly contributed to the worsening of fiscal deficit that the 2017 national Budget is attempting to address,” he said.
Prof Saasa said that step should be honoured consistently as it would help to restore fiscal discipline.
“The main message to Government here is that expenditure pressure should, to the extent possible, not be allowed to derail the well-meaning fiscal consolidation and the restoration of fiscal fitness that is essential for sustainable inclusive growth and development,” he said.
He explained that the evident fiscal slippages during the 2016 spoke to the dire need to swiftly introduce fiscal discipline and re-visitation of the fiscal consolidation drive.
Prof Saasa further explained that Zambia’s current account balance would evidently remain in deficit and was likely to remain so in the next 2-3 years.
He also said the targeted level of the GDP of around 18 percent was realistic against the backdrop of the fiscal challenges Zambia was facing.
“To the extent that one primary consideration for any Budget is to raise the requisite domestic revenue to meet development objectives, the targets level of the GDP seems to be realistic.
“The recent history of revenue collection capacity of Government has been less than satisfactory, which calls the Minister of Finance to see how best he can navigate around some of the clear headwinds considering the experience of, say, the last two years,” he said.
Government aims to limit the overall fiscal deficit to no more than 7 percent of the GDP on cash basis.