The 2017 Budget was announced this past Friday, 11th November, 2016. I will present a summary. I will not comment on the issues I expected from this budget or what has been done. This is just a summary - maybe a little highlight of what a particular issue means.
The 2017 Budget is under the theme:
“Restoring Fiscal Fitness for Sustained Inclusive Growth and Development.”
Due lower economic activity in the advanced economies, the global economic growth in 2016 is projected at 3.1 percent this is slightly lower than the 3.2 percent recorded in 2015. In emerging and developing economies, growth is projected at 4.2 percent in 2016, growing the 0.2 percet from 4.0 percent recorded in 2015. Sub-Saharan Africa growth is projected to fall to 1.4 percent in 2016 from 3.4 percent in 2015. In addition world trade is projected to grow by 2.3 percent in 2016 which is lower than the 2.6 percent growth recorded in 2015.
For Zambia, growth is projected to be just above 3 percent in 2016 against a target of 5.0 percent and to marginally rise to 3.4 percent in 2017.
The macroeconomic objectives for 2017 are:
- achieve real GDP growth of at least 3.4 percent;
- attain end year inflation of no more than 9.0 percent;
- attain domestic revenue mobilisation of at least 18.0 percent of GDP;
- limit the overall fiscal deficit to no more than 7.0 percent of GDP on a cash basis;
- maintain domestic borrowing to no more than 2 percent of GDP;
- build up foreign exchange reserves to at least 3 months of import cover by end 2017; and
- support the creation of at least 100,000 decent jobs.
Government will promote industrialisation as a means of diversifying the economy through facilitating value addition in the agriculture, mining and forestry sectors. In 2017, Government will facilitate the development of the Kafue Iron and Steel Economic Facility Zone and the Kalumbila Multi Facility Economic Zone.
In order to ensure efficiency and disengage Government from the (energy) sector, the procurement of finished petroleum products will with effect from 1st March, 2017 be undertaken by the private sector. Government’s role will be limited to regulation. Government is examining the viability of Indeni and TAZAMA pipeline. Fuel prices will be adjusted in line with changes in market conditions.
Emphasis will be on the construction of roads that support economic growth and foster regional trade. These include the Chingola-Solwezi, Kitwe-Chingola dual carriage way, Lusaka-Chirundu Link 4, Mpika-Chinsali, Chinsali-Nakonde and Solwezi-Kipushi.
In trade sector, Government will:
- Operationalise the Bilateral Trade Agreements with the Democratic Republic of Congo and the Peoples Republic of Angola;
- Provide for advance ruling on rules of origin for goods originating from countries with which Zambia has signed trade agreements. These include SADC and COMESA member states as well as India and China;
- Implement a Single Window platform for various border agencies to enhance trade facilitation; and
- Establish trade centres at the borders of our major non-traditional export markets beginning with Kasumbalesa, Kipushi and Chirundu.
The IDC has been directed to conduct a situational analysis of all SOEs under its portfolio with a view to recapitalise those that have a good business case and hiving off those that are not viable. In 2017, SOEs to be reviewed include Zesco, Zamtel, Zambia National Building Society, Indeni, TAZAMA Pipeline, Zambia Railways and Zambia State Insurance Corporation.
The 2017 Budget by function is:
The resources are as follows:
The PAYE bands are:
The revised vehicle Carbon tax rate are:
The 2017 Budget has also introduced the border crossing fee applied to all motor vehicles as a revenue measure. The fees applicable are:
Therefore, the 2017 Budget resource envelope is broken down in K '000 (millions of Kwacha) as:
Other notable changes in the 2017 Budget include:
Cross border visa increase from K1,000 to K1,500
Transit visa from K2,000 to K3,000
Increase of Advanced Income tax from 6% to 15%
Also introduced with the 2017 Budget are:
Skills development levy - 0.5% on payroll payments for companies that pay Company Income tax
Tourism levy - 1.5% on total bills paid to hotel, motel, lodge, etc
Customs Duty Changes
Airtime excise duty increase from 15% to 17.5%
Semi-processed edible oil increase duty from 5% to 15%
Spare parts duty increase from 5% to 15%
Plastic carrier bag duty from 25% to 40%
Cotton wool duty to 15%
VAT Changes
No VAT refund for: Motor Vehicle parts, Fuel (petrol), Fuel (10% of Diesel cost) - only 90% VAT can be claimed now, air conditioning and domestic refrigeration equipment, mobile phones, Television sets, decoders, video players window coverings (curtains and blinds), construction of houses for staff,
This is all I could quickly put up from the Budget. A lot has been done and frankly I expected a different budget considering that the country is in economic challenges in which demand is expected to be stimulated and certain measures avoided which would increase costs to businesses or citizens.
