BUUMBA CHIMBULU
PRICEWATERHOUSECOOPERS (PwC) has warned that uncertainty surrounding donor support poses significant risks to the country’s economic stability, noting that the resulting funding gap is increasing pressure on other non-governmental organisations (NGOs) to intervene.
PwC Senior Partner Andrew Chibuye, highlighted that the outlook for donor funding remained uncertain, with potential reductions or shifts in contributions from key partners threatening the country’s fiscal balance.
Mr Chibuye cited the United States’ recent suspension of foreign aid to the country’s health sector as a clear example of its vulnerability due to reliance on external assistance.
He said this in a recently launched PwC Zambia 2024 Economic Review and 2025 Outlook Report.
“The effect of this has been reduced access to health services as the suspension led to concerns of availability of medicines and other health commodities.
“The cut also increases pressure on other NGOs as organisations like Cecily’s Fund have had to step in to fill the void left by the absence of USAID funding, highlighting the reliance on external support for maintaining health and education services,” Mr Chibuye said.
Mr Chibuye also noted that while the UPND-led government initially introduced tax reforms to stimulate economic growth and improve livelihoods, recent tax increases outlined in the 2025 national budget reflect a shift in fiscal strategy in response to changing economic realities.
He pointed out that the resumption of debt servicing in 2024 had placed additional pressure on the national budget, with a large share now being allocated to debt repayments.
This had raised concerns about the long-term sustainability of the country’s fiscal position and the potential impact on essential public services and development initiatives.
“The 2025 budget demonstrates a continued move towards self-reliance, with 80 percent of funding expected to come from domestic sources and only 20 percent from grants and external financing. This shift highlights the government’s commitment to reducing external debt,” he explained.
However, Mr Chibuye warned that new tax measures proposed in the 2025 budget – including an advance income tax on remittances exceeding US$2, 000, higher corporate income tax rates for non-traditional exports, and increased excise duties on betting and non-alcoholic beverages – have sparked concern within the private sector.
Businesses feared that the tax hikes could have a detrimental effect on the economy and private enterprise.
“New proposed tax measures introduced in the 2025 budget include an advance income tax on remittances exceeding US$2, 000, an increase in the corporate income tax rate for non-traditional exports, and higher excise duties on betting and non-alcoholic beverages.
The private sector has expressed concerns over these tax hikes, warning that they could negatively impact businesses and broader economy,” Mr Chibuye said.
