FINANCE minister Bwalya Ng’andu says almost all sectors of Zambia’s economy are expected to record negative growth this year.
He said this when he presented a K119.6 2021 billion national budget in Parliament on Friday.
On domestic economic developments, Dr Ng’andu informed the House that real Gross domestic Product (GDP) growth is projected at negative 4.2 per cent in 2020, the first recession since 1998.
For the 2021 fiscal year, the government, on specific macro-economic objectives, targets to achieve a real GDP growth rate of at least 1.8 per cent, reduce the inflation rate towards the six to eight per cent medium-term target and to increase gross international reserves to at least 2.5 months of import cover.
The Zambia Statistics Agency announced on Thursday that the inflation rate for this month is 15.7 per cent.
“Almost all the sectors are expected to record negative growth,” he said.
“Disruptions in supply chains and containment measures have had a severe impact on sectors such as tourism, construction, wholesale and retail trade as well as manufacturing.”
In addition to the effects of the COVID-19 pandemic, the minister said electricity rationing has contributed to the contraction of overall economic activity in the country.
He noted that despite the negative growth in most sectors, the agricultural as well as information and communications technology (ICT) sectors were projected to register positive growth.
“Favourable weather conditions and early distribution of farming inputs in the 2019/2020 agricultural season boosted crop production,” Dr Ng’andu said.
“The information and communication technology sector is also projected to grow mainly driven by increased demand for data services and mobile money transactions in the wake of the COVID -19 pandemic.”
On this year’s budget performance, Dr Ng’andu said its execution had been challenging, mainly due to the impact of COVID- 19 pandemic.
He highlighted that revenues and grants amounted to K42.8 billion during the period January to August 2020, which was 7.7 per cent below the target of K46.4 billion.
“The underperformance is on account of subdued economic activity. Revenues and grants are now projected at K65.9 billion by the close of 2020, which is 12.0 per cent below the target of K75.0 billion,” Dr Ng’andu said.
“For the period January to August 2020, total expenditure, including amortisation, amounted to K72.1 billion and was 27.2 per cent below the target of K99.0 billion. This outturn was due to the underperformance on revenues and lower disbursements on foreign financed projects.”
By the end of year, according to Dr Ng’andu, total expenditure is projected to be K111.9 billion, representing 5.6 per cent above the target of K106.0 billion.
“The higher than programmed expenditure is mainly attributed to COVID-19 mitigating measures and agricultural related expenditures,” said Dr Ng’andu.