Proper implementation of a national  budget improves citizen’s well-being

Wed, 28 Dec 2016 12:28:41 +0000

By Buumba Chimbulu

IN the modern world, every government aims at maximising the welfare of its country and it requires a number of infrastructural, economic and social welfare activities.

All these activities require huge expenditure to be incurred. This requires appropriate planning and policy of the government.

The solution to all these problems is “Budget”. A Budget is a document containing detailed programmes and policies of action for the given fiscal year.

On November 11 2016, the Minister of Finance, Felix Mutati presented a K64.5 billion national budget to Parliament which had detailed information on how Government plans to improve lives of citizens while growing the economy.

Government plans to execute the budget mainly through the domestic revenue collection.

Mr Mutati explained that out of the K64.5 billion, which represented 27.7 percent of the GDP, K42.94 billion would be through domestic revenues, K2.23 billion through grants from cooperating partners and K19.33 billion through debt financing.

What the minister was simply saying is that the growth rate of the country’s economy depends on the rate of saving and investment.

For this purpose, budgetary policy aims to mobilise sufficient resources for investment in the public sector.

Therefore, the Government makes various provisions in the budget to raise the overall rate of savings and investment in the economy Before the approval of the budget by Parliament, which occurred on Thursday, 22nd December 2016, Mr Mutati and other cabinet ministers undertook the initiative of engaging the locals on the implementation of the plan.

Other cabinet ministers who were in Mr Mutati’s entourage was Minister of Infrastructure and Housing, Ronald Chitotela and Minister of Transport and Communication, Brian Mushimba as well as Northern Province Minister Brian Mundubile.

Still on the mission, the ministers also explained to the locals on the contents the budget contains while getting feedback from the business community.

Among the areas Mr Mutati and his entourage visited was Kasama where he met the business community and the ordinary citizens where he explained how Government would implement the K64.5 billion national budget.

Addressing the business community in Kasama, Mr Mutati said Government will ensure it implements and monitors projects as indicated in the 2017 national budget by working harder.

Mr Mutati said project implementation remained a challenge to Government due to various reasons.

“We are still having challenges in implementing and monitoring and that is where we need to work harder,” he said.

He explained that this could, however, only be done by making the right choices which would ensure all stalled projects were completed.

“2016 has been a difficult year, we spent more than we could generate. We ended up having incomplete projects and part of this is because of the subsidies. We failed to complete many projects because resources were channelled to subsidies,” he said.

Government budget is used to prevent business fluctuations of inflation or deflation to achieve the objective of economic stability.

The Government aims to control the different phases of business fluctuations through its budgetary policy.

Objectives of government budget reallocation of resources includes management of public enterprises, economic stability and reducing inequalities in income.

Others are creating wealth, reducing regional disparities, economic growth, tax concessions or subsidies directly producing goods and services.

Economic inequality is an inherent part of every economic system and Government aims to reduce such inequalities of income and wealth, through its budgetary policy.

Government also aims to influence distribution of income by imposing taxes on the rich and spending more on the welfare of the poor.

Government’s position to ensure it implements and monitors projects as indicated in the 2017 national budget will help Zambia not to fall into a budget deficit.

This is because governments in many countries run persistent annual fiscal deficits when a budget deficit occurs once tax revenues are insufficient to fund their spending, meaning that the State must borrow money, usually in the form of government bonds.

Many countries run large and often semi-permanent fiscal deficits due to a number of reasons some of which are short-term and others linked to structural, deeper fiscal issues facing one or more countries in particular.

Commenting on the policies in the 2017 national budget, Northern Province Chamber of commerce Secretary Boniface Sambo implored Government to honour its policy consistency.

According to Mr Sambo who spoke on behalf of the Kasama business community, policy consistency allows the business owners to easily plan and make decisions for their expansion.

This is because creating a national budget, and sticking to it, is essential to a healthy financial position.

Understanding and knowing where a country’s money goes will help not only Government, but also citizens entrepreneurs to make responsible financial decisions.

As a way of promoting economic diversification and for a country to generate domestic revenue through trade, the aspect of road connectivity is a critical component.

For this reason, Government in the 2017 national budget allocated K20.1 billion to key sectors of the economy, out of which K8.6 billion has been directed to road infrastructure projects across Zambia.

Commenting on this development, Minister of Transport and Communication, Brian Mushimbe explained that Government would ensure that the road network is taken care of as a way of encouraging investment in Zambia.

According to Mr Mushimbe, road infrastructure remains one of Government’s priorities.

Government is keen to develop the road infrastructure because effective and efficient transportation provide economic benefits that result in multiplier effects such as better accessibility to markets, employment and additional investments.

For business to thrive among African countries, the variety of road and rail systems, not to mention inconsistent customs and regulations, must be addressed.

The role transport plays in economic development makes it a derived demand as the sector in itself is not productive but is responsive to forces generation in the production and consumption sectors.

Consequently, citizens who are deprived of transportation infrastructure miss out on several economic opportunities that is why Minister of Infrastructure and Housing Ronald Chitotela, emphasised that infrastructure development plays a critical role in development.

Government allocated K8.6 billion in the budget towards infrastructure development.

According to Mr Chitotela, the economy needs reliable infrastructure to connect supply chains and efficiently move goods and services across borders.

Infrastructure connects citizens to higher quality opportunities for employment, healthcare and education.

As developing countries, such as Zambia aim to boost economic growth, infrastructure investment plays an important role in stimulating commerce.

However, not all infrastructure investment is equal. Projects should be prioritised and undertaken only if they would remove an obvious road block to business or substantially improve access along trade, labour and economic routes.

Therefore, a budget if not properly managed, which includes undertaking projects not budgeted for, could lead to deficits.