JCTR SAYS THAT SOME CRITICAL AREAS RELATING TO ZAMBIA’S DEVELOPMENT ARE INADEQUATELY TACKLED IN 2003 BUDGET 

5 February 2003

The challenges of poverty reduction, huge external debt burden and the ever-rising cost of living have not been adequately addressed by the 2003 national budget, says the Jesuit Centre for Theological Reflection (JCTR).

According to the JCTR, one of the development challenges this country is facing is to ensure that people are given incomes that are consistent with the demands of decent living says JCTR.  The theme for this year’s budget is “Food Security through Production and Job Creation”.  One of the ways through which food security can be attained is indeed -- as reflected in the theme -- through production and job creation.  But of course we know that it does not end here.  People starve not necessarily that they have no jobs but also because their incomes cannot afford them to meet the food requirements.  In the Zambian context, it is difficult to guarantee food security only on the basis of having people in employment.

The majority of Zambian people do not earn adequate incomes to meet their daily needs.  The government in the 2002 budget proposed a tax exemption -- Pay As You Earn – threshold of K1,800,000.  At the time this proposal was made cost of food only in Lusaka as indicated by the JCTR Basic Needs Basket for a family of six in Lusaka was averaging K324,650 per month.  In this year’s budget, the tax exemption threshold of PAYE as been adjusted to K1,920,000.  According to the latest JCTR Basic Needs Basket for the month of January, the average cost of food only is K401,050.  If we add other essential non-food items to the cost of food such as housing, water, wash and bath soap, etc., the total cost averages K1,029,150.  An important point to note is that this is only the cost of basic requirements.  If other costs such as personal care are included the cost will even be much higher.

External Debt continues to Overshadow Social Sector Spending.  According to the Minister of Finance and National Planning, the 2002 national debt stock stood at US$6.5 billion down from US$7.2 billion in 2001 thus representing a marginal decrease of 9.7%.  While it is encouraging to note that there has been some modest reduction in Zambia’s external debt, the debt stock is still too high to have positive effects on social sector spending and thus will continue to affect the economy adversely.

The government has pledged to continue remitting money to the creditors – has set aside US$108.3 million or K560.4 billion, 8% of the earmarked total expenditure for the year -- in order to assure continued debt relief to Zambia.  But one has to ask: at what cost to the Zambia people is this huge sacrifice being made to the creditors?  Is it morally right to starve one’s children today in the hope that there will be food tomorrow?

The amounts to be paid in debt servicing should be contrasted with the PRSP activities that have been allocated K420.7 billion or 6.8% of the total expenditures compared to the allocation of K450 billion in the year 2002.  In terms of actual allocations, only a quarter (approximately) of the resources targeted for poverty reduction activities in 2002 were actually utilized for this purpose.  Although Zambia faced a number of problems such as the hunger crisis, budgetary allocations to poverty reduction programmes should have been given priority by redirecting resources from those budget lines that have no direct bearing on the poor.  If last year’s trends are anything to go by, we might see a situation where actual allocations will even be much less.

The priorities for poverty reduction programmes are those identified in the Poverty Reduction Paper (PRSP) through a national consultative process.  It is critical that commitment should be seen by ensuring that these programmes are financed at least 60% from domestic resources.  This will ensure that poverty reduction programmes are not derailed.

The Zambian government is a signatory to the Millennium Development Goals (MDGs) with one of the critical goals being that of halving world poverty by 2015.  Moreover, the quest for poverty eradication is not only an economic issue, above all it is a moral issues.  But is this goal tenable in light of the current budget framework and huge challenges of poverty, external debt and high cost of living?

For more information, contact Charity Musamba at JCTR, e-mail: jctr@zamnet.zm;