Finance Minister Alexander Chikwanda yesterday unveiled the third Patriotic Front (PF) K42.682 billion national budget with a freeze on both wages and staff recruitment in the civil service in the coming year.
The budget would also see an increase in the prices of beer and talk time following the introduction of duty on the commodities.
The prices of beer and talk time would go up in the coming financial year following the introduction of between 10 and 25 percent duty on the two necessities.
Chikwanda has also for the first time admitted that the 2013 budget had suffered a 8.5 percent fiscal deficit of the Gross Domestic Product (GDP) while inflationary rate had escalated to 7 percent because of the removal of subsidies on maize and fuel.
The K42.682 billion budget will have K29.54 billion financed by domestic revenue and grants of about K2.63 billion while the balance of K10.51 billion would be met through foreign and domestic borrowing.
The government has announced that in the 2014 budget, it would limit domestic borrowing to 2.5 percent of the GDP in order to contain an expected overall budget deficit to no more than 6.6 percent which in the 2013 budget hid a record 8.5 percent.
Government measures to address long-standing structural challenges relating to fuel and maize subsidies as well as the distortions in the public service pay structures, the projected fiscal deficit for 2013 had doubled to 8.5 percent from 4.5 percent.
The government has also increased the exempt threshold of Pay as You Earn (PAYE) to K3, 000 from K2, 200.
Chikwanda in his budget speech themed Moving forward to consolidate growth and social justice in peace and unity said the Sixth National Development Plan had been revised in order to align it with the PF government development agenda which is centered at an ambitious job creation programme.
In the revised Sixth National Development Plan, the PF government has taken agriculture, tourism, manufacturing, energy and construction sectors as key in the consolidation of economic growth and to promote social justice.
Chikwanda said the PF macro-economic objectives for the 2014 budget were anchored to achieve real GDP of 7 percent and to create 200 000 thousand jobs and attain an end of year inflation of no more than 6.5 percent.
In the agriculture sector, Chikwanda said it was regrettable that there was a significant decline in the production of cotton which was largely caused by government’s poor pricing policy.
Chikwanda warned mining companies who are in the habit of giving fraudulent profit reports that government would monitor the mines because there was need to increase income collection from the sector.
He said in the energy sector, the government had embarked on the construction of two provincial depots whose work would be completed this year while Indeni Oil Refinery would continue undergoing rehabilitations.
Concerning the health sector Chikwanda said, “Government remains committed to bringing affordable and quality health care as close to the family as possible. Sir in 2014, the government will procure specialized equipment and requisite supplies for tertiary level hospitals to ensure non-interruption of services and reduce referrals abroad.”
On the reforms being undertaken in the Public Service Pension Fund, Chikwanda admitted that the fund had huge deficits which had been projected at K2.9 billion in the year 2014 and because of the deficit, the finance minister said reforms in pension scheme were necesary.
“Mr Speaker Sir, our divergent views should never be a cause for drifting from our common purpose of moving the country forward and creating a society premised on social justice and prosperity for all,’ Chikwanda at the conclusion of his budget speech.