REPOSSESSING THE BUDGET REVIEW DEBATE The current debate about the 2015 budget has been hijacked and thus rendered it the most unproductive and misleading debate that I have ever come across. People with personal grudges against Hon. Chikwanda have high jacked an important national occasion and reduced it to an opportunity to insult the persona of the Minister of Finance in all sorts of manner. There is need for us to engage in debate that has productive outcomes. Those who are in the know need to share their understanding with those who look up to them for guidance to understand national matters. Zambia has a very young population which also constitutes the electorate. The young electorate which is increasingly becoming the defining factor of our destiny needs appropriate guidance and the media can play a better role than what is obtaining currently. Politicians also need to identify the challenges, explain the implications and then give alternative solutions. I have heard so many reactions to the 2015 budget. Most comments are merely exercises of compliance. You are in opposition or the NGO sector – yours is to criticize – then you will be seen to be working! You do not have to qualify your criticism – you just have to use the right terms! Some reactions have gone as far as attaching the budget to the persona of the Minister of Finance in a negative way. Others have described it as a “thieving budget”. Many have described it as not being pro-poor though they have been kind enough to offer the continued wage freeze and the high contribution to the fiscus by the workers through PAYE tax compared to other taxes from the business sector as an explanation. A discussion on UNZA Radio on Friday 17 October 2014, had a participant calling the budget pathetic and I waited for the justification in vain. Several other commentators have simply adopted repeatedly and commonly used descriptions of the budget without qualifying their verdict. Terms such as “not inspiring”, “not progressive” etc. etc. find common usage amongst many commentators withholding their reasons. SOME FACTS ABOUT A BUDGET Let us start by understanding a few facts about the ownership of the budget policy pronouncement. In this regard, we need not go far. The Minister of Finance starts by saying, “Mr. Speaker, I am the bearer of a message from the President…” This means that this is a budget from the President and his Cabinet and it is not the Minister of Finance’s budget! He alone does not constitute Cabinet! The President runs government assisted by his Cabinet and the budget is one instrument through which the President and his Cabinet redistributes the wealth of the nation. The next stage in the budget debate process will constitute various ministers including the Minister of Finance giving their own ministerial budget policy statements. Even these ones cannot be attached to the persona of any minister. They are collective efforts of all concerned in each particular ministry and are integral parts of the overarching government policy direction. BUDGET REVIEW EXERCISE Ideally, the budget should be reviewed with a view to establish the extent to which the budget policy statement so pronounced strikes the delicate balance between fundamentals of what informs economic decisions arrived at, the need to address the challenges of the nation, and the need to fend off the interests of the competing outside world. The budget must fit into the complexity of the interconnectedness between all these competing interests to arrive at an annual plan that speaks back to the state of the nation address, the applicable Medium Term Expenditure Framework (MTEF), the applicable Five year Nation Development Plan, and the Vision 2030 in order to take the nation forward. In this regard, the budget must be seen to rely on information provided by the Central Statics Office to decide where and when a new economic or social undertaking is needed, for instance. The budget must also be seen to be addressing national challenges and sustaining the resilience of the economy as it interfaces with external economies and interests. Specifically, in reviewing the budget policy statement the exercise must subject the budget to the following set of criteria (amongst many others) as suggested by Dr. Ilola Imakando to Members of Parliament in October 2011 – The budget must be seen to be ensuring that the economy: 1. Maintains fiscal discipline; 2. Maintains a reasonable stable exchange rate; 3. Keeps inflation in check; 4. Maintains a favorable business environment; 5. Maintains a stable balance of trade; 6. Continues ensuring that the economy is a favored destination for FDI; 7. Creates business enterprises to underwrite job creation; 8. Increases the competitiveness of the goods and services; 9. Remains resilient since it is part of the global economy; and 10. Achieves shared economic development. The aim must be to qualify the budget as a suitable instrument that creates a golden thread with the State of the Nation address by the Head of State, the MTEF, the applicable Five Year National Development Plan, and the Vision 2030. The budget must be seen to be contributing towards meeting the overarching objective of achieving the transformation of our country from a poor state characterised by a mono-product economy, into a private sector led upper-middle income country, built around (amongst many others) eight pillars: 1. Suitable economic and social infrastructure; 2. Mining activities with local beneficiation and wealth retention; 3. Sustainable agriculture with a developed agro-processing industry; 4. Tourism activities with local beneficiation and wealth retention. 5. Enhanced local residents’ participation in the economic value chain of our base products; 6. Developed financial services that should underwrite participation of our residents in the economic activities within our boarders and beyond; 7. Sustained strategies for youth renaissance; and 8. Revitalised efficiencies in our education and health systems to produce generations of well-trained; healthy, competitive human capital, and a middle-class consumer citizenry. Once the budget is subjected to the above test, the extent to which the budget is suitable or not can then be determined after establishing whether the source of decision making is professional and fair or politically motivated, whether it speaks back to the challenges of the nation or has other motives, and whether it forms part of the building block of the overarching objectives of the Vision 2030 or not. Lastly, the Reserve Bank’s monetary policies must be seen to provide a counterbalancing effect to the fiscal policies contained in the budget. Expansionary fiscal policies must attract necessary measures from the Central Bank to avoid structural distortions in the economy, for instance. Care must also be taken on the part of budget commentators to apprise themselves with various external policy directions especially from trading partners and global movers and shakers of economic trends. Developments in the global capital and financial markets must equally attract close monitoring to adequately equip a commentator. In the next posting, I will dwell on my view on the 2015 budget. Lucky Mulusa Mail your comments to: luckymu2009@gmail
Posted on: Mon, 20 Oct 2014 11:25:57 +0000
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