REALISTIC ECONOMIC PROJECTIONS VITAL TO EFFECTIVE NATIONAL PLANNING

November 2003

A wide consultative national budget formulation is critical to national development as citizens’ desires and aspirations of how, where and what their money is going to be spent on are likely to be represented, says the Jesuit Centre for Theological Reflection (JCTR).

“As the nation proceeds with its new plans of formulating the national budget under the Medium Term Expenditure Framework (MTEF), two issues to this important event need to be highlighted,” says Muweme Muweme, Coordinator of the Social Conditions Research Project of the JCTR.  “First is that concerning the process of arriving at a national budget that is participative in character.  Second is the content of the budget itself.”

So far the process seems to be commendable as it represents government’s effort at meeting the needs of its people in national budget formulation.  One of the difficulties, however, is the content issue of actual realization of the economic targets or projections.  Zambia has had to revise its economic targets in the past.  This means either that the nation did not work hard enough to achieve the set targets or the projections were not realistic in relation to Zambia’s situations.

The government’s “Green Paper” outlining the MTEF projects, among other things, that the economy will grow by 4.5% in 2004 and 5.0% in 2005 and 2006.  Year-end inflation will be reduced to a single digit of 6.5% in 2006.  It is also expected that there will be (nominal) increases in domestic revenues.

The growth of the Zambian economy is predicated on agriculture, manufacturing, tourism, mining, energy, construction and transport.  Mining is thought to contribute to growth through the expected favourable prices of copper, especially as Zambia will increase its output of copper following the opening up of new mines.  “This assumption,” says Muweme, “of anticipated rise in prices of copper on the world market is one of the key contributing factors to Zambia’s current debt crisis.  One hopes that the nation’s preoccupation with copper mining will not divert focus on current efforts at diversifying Zambia’s economy, especially the priority sector of agriculture.”

Inflation has been one of the major problems of our country, affecting commercial bank lending interests, affecting planning at various levels and particularly hurting the poor most.  Addressing inflation would also lessen hardships that the majority poor people of Zambia face.  Muweme further says that the continuous rise in the prices of food has been one of the fundamental problems of inflation.

For example, the JCTR monthly Basic Needs Basket for a family of six in Lusaka has shown increases almost every month in the price of food.  The cost of food only for a family of six is currently at K390,700.  In September food only was costing K384,450 and in August it was K367,700.  Trends in the previous years have also shown that prices of food tend to rise towards the end of the year.  This means that not only are the poor suffering from other forms of deprivations but are having difficulties in accessing the most fundamental aspect of their welfare, good food for good nutrition.

The total cost of the Basic Needs Basket, that is, food and non-food essential items such as energy, water, housing, electricity, wash and bath soap, etc., has increased from K1,027,450 in September to presently costing K1,031,700.  This shows an increase of K4,250.  Note that costs for other necessary requirements such as personal care, transport, health, education, etc., are not included in the calculation of the total Basic Needs Basket.