Financial Experts have observed that Zambia’s budget performance for the first quarter of 2020 was better than anticipated given the projected negative impact of COVID-19 on both revenue collection and expenditure requirements.
The Public Financial Management Consult says revenues, grants, and domestic financing totaled K18.1 billion and was above target by less than a percentage, with the majority of the tax instruments being above target except for Value Added Tax.
PFM-G Consult Senior Economist Bright Chizonde says on the expenditure size, the government spent a total of K17.4 billion, with non-discretion expenditure accounting for more than 90 percent.
Mr. Chizonde said there is however need for government to improve its fiscal discipline since the second quarter is projected to be more challenging.
He has noted that with the coming of the COVID-19, it is expected that the government’s fiscal position will worsen.
Mr. Chizonde said this notwithstanding, the negative impact on revenue during the first quarter of 2020 was minimized because a greater portion of the economy was still operational.
He said Government only experienced a decline in Value Added Tax while other tax instruments remained resilient.
On the expenditure side, Mr. Chizonde said debt servicing and resource requirements to combat COVID-19 were yet to increase adding that it must also be noted that the depreciation of the Kwacha, was only pronounced towards the end of the first quarter.
He said the Government should, therefore, take urgent steps to safeguard the fiscus in the second quarter since revenues are expected to reduce further while the exchange rate risk remains escalated.
Mr. Chizonde said in order to create fiscal space for combating COVID-19, the government should urgently put some construction projects on hold, further improve its operations and seek further external assistance.