It had been a busy couple of days for Zambia’s Minister of Finance who delivered his maiden budget to parliamentarians on Friday 27th September. This was followed by a series of guest appearances at a tripartite event hosted by ZICA, EAZ and ZACCI, a couple of breakfast and evening events.
A clearly exhausted Dr. Ngandu was non-committal to attend the KPMG post-budget gala dinner at the Intercontinental Hotel on the last day of September. But the allure to be hosted by one of Zambia’s premier consulting firms, KPMG, was irresistible hence he mustered the strength, despite a course voice and fatigue, to come and give his take on why this budget was significant for the private sector.
The event, which was a masterstroke of how post-budget events were supposed to be held, had guests forward their questions using a mobile app which provided the Finance Minister an idea of what the general sentiment was about his maiden budget and what pertinent issues needed to be responded to.
In addition, there was a candid panel discussion that had representatives of industry where one panelist quoted Professor Oliva Sassa’s jibe at the budget by dubbing Dr. Ngandu as the “Minister of Finance without Finance”. The panel that was moderated by Godfrey Mutizwa (who also featured at last year’s event). The discussants included Sokwani Chilembo (CEO Chamber of Mines), Leonard Mwanza (CEO Bankers Association of Zambia) and Chipego Zulu (Vice president Zambia Association of Manufacturers).
When Dr. Ngandu took to the podium, the audience was exposed to the human side of the Finance Minister. He valued the sympathy that he had received from many Zambians and took no offense from his longtime friend, Dr. Sassa’s jibe. As tired as he was, he remained resolute that his budget had one core principle in mind: “Do no harm”. This is why his team, following extensive consultation, decided not to tinker Direct Taxes and Value Added Tax.
With a purse that was restrictive, using zero-rating on VAT was one of the other instruments at his disposal.
Hot of a number of attendee’s minds was the issue of an IMF program. It took the vibrant Moderator to usher back the Minister to offer a response to this pertinent issue. Dr. Ngandu advised that he and his team were not discussing an IMF program at this moment as they needed to get their fiscal house in order. The long road to IMF program can only be paved with fiscal consolidation and prudent debt management was the interpretation that was shared by former Finance Minister Felix Mutati who gave his two cents on the 2020 Budget. He further added that the path to fiscal fitness was through dismantling arrears and abolishing of the sales tax desires.
However, Mr. Mutati also signaled some of the risks that lay in wait for the Finance Minister. The elephant in the risk room was the budget deficit. He identified non-tax revenue has the red hearing that was notorious in terms of collections and compliance. Failure on this front would be the Achilles heel to the budget’s execution. Plugging the hole through foreign direct investment was also a challenge as there were many factors and geopolitical considerations that needed to be kept in mind.
Although the tax technocrats were now expected to dust their VAT hats following the final nail in the sales tax coffin, Director-General Kingsley Chanda of ZRA was confident he and his team would be able to collect the taxes that would be due. Furthermore, he believes that the Government would be able to allocate collected tax funds to the sinking fund to ensure that the 100% no-debt default record was maintained.
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