THE government has targeted to ‘grow’ the country’s GDP next year to 1.8 per cent.
The other ambitious target is to reduce the inflation rate towards the six to eight per cent medium-term target.
Finance minister Dr Bwalya Ng’andu disclosed these projections when he presented a K119.6 billion 2021 national budget in Parliament on Friday.
The theme for the budget is: “stimulate economic recovery and build resilience to safeguard livelihoods and protect the vulnerable.”
The macro-economic targets for this year include achieving a real Gross Domestic Product (GDP) growth rate of at least three per cent and to achieve and maintain inflation within the target range of six to eight per cent.
Nothing of that forecast is true today; GDP is at negative 4.2 per cent, the first recession since 1998 and inflation for the month for this month is 15.7 per cent.
Informing the House on macro-economic objectives, policies and strategies for next year, Dr Ng’andu said: “Mr Speaker, the COVID-19 pandemic has stifled economic growth worldwide, including ours.”
He said the focus, in the medium-term, would be on containing the spread of the virus, mitigating the effects of the pandemic and restoring macro-economic stability, as well as growth.
Dr Ng’andu explained that in addition, priority would be to move towards attaining fiscal fitness and restoring debt sustainability, dismantling domestic arrears and safeguarding social protection spending.
“This budget, therefore, sets a foundation for the achievement of these objectives in line with our economic recovery programme,” Dr Ng’andu said.
“The specific macro-economic objectives for 2021 will be: 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, increase gross international reserves to at least 2.5 months of import cover; reduce the fiscal deficit to 9.3 per cent of GDP and achieve domestic revenue collections of not less than 18.0 per cent of GDP.”
On economic diversification and job creation, he noted that economic diversification and job creation were key pillars in supporting Zambia’s economic recovery.
He added that because of that reason, agriculture, mining, tourism and industrialisation were expected to drive growth while energy and infrastructure development would be key enablers.
Dr Ng’andu also said the country’s agricultural sector performed “very well” in the 2019/2020 farming season.
“In most crops, the country recorded an increase in production. For instance, maize production recorded a 69 per cent increase to 3.4 million metric tonnes from 2.0 million in the 2018/2019 farming season,” Dr Ng’andu told Parliament.
Meanwhile, the minister pointed out that the tourism sector was the hardest hit by the COVID-19 pandemic, “with virtually no international tourist arrivals since March 2020 due to travel restrictions and subdued domestic tourist activity.”
He said to revive the sector, the government had implemented relief measures like time to pay agreement covering income tax and Value Added Tax (VAT).
“I am pleased to note that domestic tourism has started to rise,” said Dr Ng’andu.
“I wish to encourage all citizens to continue supporting the tourism industry while observing the COVID-19 health guidelines.”