By 
Patriots for Economic Progress (PEP) leader, Sean Tembo, has described the K19 billion allocated to defense and public order under the 2025 budget as misplaced expenditure.
Tembo wondered why such a huge amount was being allocated to defense and public order when the country was not at war but had high poverty levels.
Dissecting the K217 billion 2025 national budget in a statement issued in Lusaka on Sunday, Tembo noted that the total budget for 2025 was K217.1 billion, representing 26.6 percent of Gross Domestic Product (GDP).
He said in the 10 years prior to 2021, the national budget averaged 17 percent of GDP, while between 2001 and 2011, it averaged 14 percent of GDP.
Tembo alleged that this meant there was a high appetite for over-expenditure under the New Dawn administration.
“A total of about K19 billion will be spent on defense and public order. For a country which is not at war and which has very high levels of poverty, this appears to be misplaced expenditure,” he said.
He stated that the 2024 national budget was projected to have a deficit of 11.6 percent, which amounts to over-expenditure at a time when the country does not have money.
Tembo indicated that the 2024 budget deficit as a percentage of GDP was projected at 6.4 percent snd domestic debt was now K225.5 billion compared to K89.5 billion in August 2024, representing a 252 percent increase in only three years.
“Domestic arrears, which is money that government owes to various suppliers of goods and services in the country, is now K79.8 billion compared to K18.2 billion in August 2021,” Tembo stated.
He highlighted that this meant reduced liquidity needed for the private sector to grow, which only accounted for 36.9 percent of all credit issued by financial institutions, while the balance of 63.1 percent was attributed to government.
Tembo argued that this exemplified the extent to which government increased borrowing using Treasury Bills and Bonds, crowding out the private sector.
“2024 economic growth is projected to decline to 2.3 percent from 5.4 percent in 2021 at the beginning of the New Dawn administration,” he highlighted.
He added that annual inflation was 15.6 percent compared to an average of 10.3 percent in 2021 and the local currency exchange rate to the United States Dollar averages K26.30 compared to K15.80 on August 24, 2021.
Tembo stated that the Monetary Policy Rate was now 13.5 percent compared to 8.5 percent in August 2021, indicating higher interest rates for borrowers with MPR-linked loans.
“Statutory Reserve Ratio has been increased by Bank of Zambia (BOZ) to 26 percent, from 7.5 percent in August 2024, meaning less money available to commercial banks to lend to economic players,” he said.
WARNING! All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR.
Comments