By Shannon Graham
The Economy might be down but that does not mean you have to be. Just because things are tough does not mean you have to kiss the good life goodbye. You have goals and dreams that at this time may seem impossible to reach. However, you can still have great success if you keep this one fundamental principal in mind.
Vision
Everything you see in life is merely the outwardly manifested version of a person's vision. Even the things in your own life that you currently have, material and non. They are a reflection of a vision you had at one time. Your greatest achievements were at one time only images in your mind. This is important to remember, because what that means is anything your mind can conceive and truly believe it can ultimately achieve.
First of all it is important to remember that thoughts are things, and adds you think so you become. With that in mind as difficult as it may be, worrying and stressing about the current state of things will get you absolutely nowhere. And if we can learn anything from the previous statement, then we know that worrying does much more than nothing in fact it becomes detrimental. So first and foremost rather than focusing on what you do not want or what you are not happy with. I want to personally challenge you to start thinking about what you do want and what you are happy with.
Now you might be saying Shannon you're crazy. How could I possibly focus on what I do want and what I am currently happy with what I've either just lost my job, my house, or both. Well I'm here to tell you that I may be crazy, but I'm definitely not wrong. At any given time no matter what the circumstance you can have power and you can have peace. It all depends on your focus and your vision.
When bad things happen we tend to focus on the bad. And not only that but we also lose sight of our long-term goals imagine what would have happened if in the middle of your struggle towards one of your greatest accomplishments you lost sight of what you are fighting for. Do you believe that you would have come out the other end of the victorious? I highly doubt it.
See it is your belief that keeps you going; it is your faith in the invisible that allows you to accomplish the impossible. The power that you have inside you is much greater than any challenge you will ever have outside of you. But you must take charge and tap into this power, it is yours for the taking but you must command it. I truly believe and your vision ultimately comes down to how far you can see with your eyes closed.
To be sure, the tools necessary to shape your destiny are invisible. They are your focus, they are your determination, and in your vision. While you cannot physically see these tools do not underestimate their unlimited power. You have proof of what they can do, you have used them before. And now in these most trying times when the very fiber of your character is being tested is when you must rise up. All of the answers and solutions you are looking for are staring at you in the mirror. Take action now, believe me there is no time to wait. Do not wait for the government to help you, do not wait for your friends and family to help you, the greatest help you will ever receive will come from the very hand that you extend to yourself.
It is said that you will never know how much bigger, stronger, and better you are until you absolutely have to. There is nothing like necessity to show a person what they are truly made of. I believe that human nature that when the odds are stacked against us that is when we come through. When it seems like the end is near that is when we reach down into the deepest pits of
what we truly are and bring forth that it is necessary to achieve.
Take advantage of the power that I know you have. Choose to keep your vision strong, make a decision to say yes to the potential that is hiding within you. View these tough times and not as the end but rather the beginning. Think not of the current issues you have as problems, but rather challenges. Allow this to be a time to exercise and build up your mental fitness. Do this my friend and as you sleep at night and as you walk during the day, your mind will ring with the timeless creed that constantly and never ending moves forward and says..... we can win.
Shannon Graham is an expert life coach, motivational speaker, and author who helps people achieve higher levels of personal power and joy in their lives. He is only 26 years old and yet has been dedicated to learning personal growth tactics for over 10 years. For a free life coaching consultation contact Shannon below.
His website is: Life coach
Article Source: http://EzineArticles.com/?expert=Shannon_Graham
Tuesday, February 17, 2009
Dr SITUMBEKO's 2009 BUDGET SPEECH
Budget Address by Honourable Dr. Situmbeko Musokotwane, MP,Minister of Finance and National Planning Delivered to the National Assembly on Friday, 30th January, 2009
1. Mr. Speaker, I beg to move that the House do now resolve into Committee of Supply on the Estimates of Revenue and Expenditure for the year 1st January 2009 to 31st December 2009 presented to the National Assembly in January 2009. 2. Sir, I am the bearer of a message from His Excellency the President recommending favourable consideration of the motion that I now lay on the Table. 3. Mr. Speaker, as I begin this budget speech, I wish to acknowledge the macroeconomic achievements that Zambia attained when the economy was under the stewardship of my predecessor, Honourable Ng’andu Magande, MP. I would also like to pay tribute to the late Honourable Emmanuel Kasonde, who twice served as Minister of Finance, and laid the foundation for the liberalisation of the Zambian economy. 4. Mr. Speaker, I present this budget at a time of great uncertainty in the world economy. The global economy is under severe strain, with recession in several advanced economies, and significantly slower growth in emerging countries. Recent developments in the mining sector have demonstrated that Zambia is also vulnerable to this crisis. These events have had a significant influence on our thinking, and therefore the preparation of this year’s budget. 5. Sir, despite these unprecedented challenges, my vision is that of a prosperous Zambia. I see a vibrant and diversified economy where hard work and the spirit of entrepreneurship are rewarded. This economy will be one that provides ample opportunity for every citizen to realize their potential and fully provide for their families. I see all our citizens, in all corners of our country, waking up each morning well nourished, in decent housing, with access to clean water and sanitation. I see our citizens having paved roads that do not flood each rainy season, reliable and renewable energy, and high quality health and education services that are within easy reach. 6. Mr. Speaker, this is the vision of Zambia that I have as I present this budget. 7. Sir, in order to realise this vision, it is critical that we build on the achievements already registered under various economic diversification programmes the Government has pursued over the years. We cannot afford to slow down on these programmes as the risks of dependency on the mining sector have once again come to the fore during the current global economic crisis. Sir, our country has abundant opportunities for diversification, and it is time for us to accelerate our efforts to harness them. 8. Sir, just as we expect citizens to work hard to drive our economy forward, they expect Government to play its role in creating a conducive and competitive environment for wealth creation and poverty reduction in every part of our country. 9. Mr. Speaker, in view of the urgent need for accelerated diversification and enhanced competitiveness, the theme for this year’s Budget is “Enhancing growth through competitiveness and diversification.” 10. Mr. Speaker, my address this afternoon follows a slightly different pattern from previous years in order to bring together Government’s policy objectives and budgetary allocations for 2009. This will enable both Honourable Members as well as the public at large to better appreciate the underlying rationale behind this Budget. 11. This Budget address therefore contains five parts. In Part I, I give an overview of the performance of the global economy during the past year. In Part II, I discuss developments in the Zambian economy during 2008. In Part III, I detail the underlying policy measures that will guide the Budget. In part IV, I present the 2009 Budget and supporting Policy, Expenditure and Revenue measures. Finally, in Part V, I conclude my address. PART I DEVELOPMENTS IN THE GLOBAL ECONOMY 12. Mr. Speaker, preliminary data indicate that global economic growth in 2008 slowed to 2.5 percent from 3.7 percent in 2007. This was on account of the onset of recession in advanced economies in the last two quarters of the year, triggered by the turbulence in the financial markets of these economies. 13. Sir, emerging economies such as Brazil, Russia, India, and China continued to drive global growth in 2008. However, growth in these economies was significantly dampened as a result of the global economic crisis. 14. Sir, Sub-Saharan Africa’s limited integration with the global financial system saw the continent posting more robust growth compared to advanced economies. Growth in the region was projected to be 5.4 percent compared with the 1.3 percent growth recorded in advanced economies. 15. Mr. Speaker, a significant consequence of the global financial crisis was the dramatic collapse of commodity prices in 2008. Oil prices, which reached record highs of US$ 147 per barrel in July, fell significantly to US$ 48 per barrel at the end of the year. Similarly, copper prices reached a record high of US$ 8,985 per tonne in July, before plummeting to US$ 2,902 by the close of the year, representing a 67.7 percent fall. Prices for other key commodities such as fertiliser also followed similar trends during the year. 16. Sir, on the inflationary front, fuel and food prices were high in the first half of the year, contributing significantly to inflationary pressures around the World. These inflationary pressures were acutely felt in developing countries, including sub-Saharan Africa where inflation rose to 11.7 percent from 7.1 percent in 2007. However, by the close of the year, inflationary pressures began to subside, due to the significant shrinkage in global demand. 17. Mr. Speaker, these global developments had some negative effects on the domestic economy, adversely affecting growth, inflation, the exchange rate and the terms of trade. PART II DEVELOPMENTS IN THE DOMESTIC ECONOMY IN 2008 Macroeconomic Performance 18. Mr. Speaker, in order to reduce poverty, the Government targeted an average annual growth rate of 7 percent over the Fifth National Development Plan (FNDP) period. Over the period 2006-2008, real Gross Domestic Product (GDP) growth averaged 6.1 percent per annum, which while robust, was below the FNDP target. 19. Sir, macroeconomic performance in 2008 was weaker due to unprecedented global and domestic events. As a result, growth was lower than projected, whilst inflation and interest rates were higher. Preliminary estimates indicate that the Zambian economy grew by 5.8 percent in 2008. This performance was mainly driven by growth in the transport, storage and communication; mining; manufacturing; and trade sectors. However, this was lower than the 6.3 percent achieved in 2007. The poor performance of the agricultural sector, and a slowdown in the construction sector contributed to the lower than expected growth. 20. Although the mining sector registered positive growth, it was affected by a sharp fall in world copper prices in the second half of the year, thereby dampening the prospects of higher growth and profitability. The agriculture sector, which employs the largest share of our workforce, experienced negative growth on account of heavy rains that resulted in flooding in some areas, thereby destroying crops. However Mr. Speaker, the country recorded a food surplus. 21. Mr. Speaker, Government policy with regard to inflation in 2008 and over the FNDP period is to achieve and sustain single digit inflation. In the last three years, this has generally been achieved with inflation outturns of 8.2 percent and 8.9 percent, in 2006 and 2007, respectively. However, the pass-through effects of high international oil and food prices resulted in the inflation outturn for 2008 being significantly higher at 16.6 percent against the target of 7 percent. Food inflation in particular, accelerated to 20.5 percent compared with 5.9 percent in 2007. 22. Sir, the exchange rate was also affected by the effects of the global financial crisis. This resulted in the sharp depreciation and increased volatility of the exchange rate of the Kwacha, particularly in the last quarter of the year. The Kwacha depreciated by 27.3 percent against the US dollar to an average rate of K4,882 in December 2008 compared to K3,835 in December 2007. However, the Kwacha appreciated by 6.3 percent and 11.1 percent against the Pound Sterling and South African Rand, respectively, reflecting their weakening against the US Dollar. 23. Mr. Speaker, an important macroeconomic objective over the FNDP period has been to maintain a prudent fiscal policy. In spite of a number of challenges, both domestic and external, I wish to report that the budget deficit for 2008 was favourable and stood at K1,394.3 billion or 2.7 percent of GDP, and was below the projected deficit of 3.0 percent. Monetary and Financial Developments 24. Mr. Speaker, on the monetary front, broad money growth slowed down to 22.1 percent in December 2008 from 25.9 percent in December 2007. This was a result of a slowing external sector performance, and a lower than expected build up of international reserves. However, growth in credit to the private sector in 2008 remained unchanged at 44 percent. 25. Sir, interest rates on Government securities increased due to the inflationary environment that prevailed for most of the year. This was compounded by reduced demand for Government securities as a result of withdrawals, especially by foreign portfolio investors. The weighted average Treasury-bill interest rate increased to an average of 17.2 percent in December 2008 from 12.9 percent in December 2007. Similarly, the interest rates on Government bonds rose, with the composite bond rate closing the year at an average of 16.7 percent from 15.6 percent in December 2007. 26. Sir, as a result, the average commercial bank lending rate increased in line with the increases observed in Government securities, rising to 26.9 percent, from 24.4 percent in 2007. 27. Mr. Speaker, the performance of the equity market was also affected by the global financial crisis. The Lusaka Stock Exchange All Share Index declined by 29.2 percent during the year. Despite this downturn, market capitalisation increased by 13.9 percent to K20,468 billion, mainly on account of the initial public offering of Zanaco and Celtel shares. Sir, the listing of local companies on capital markets is in line with Government’s policy of empowering Zambians to own shares. External Sector Performance 28. Mr. Speaker, the country’s balance of payments position in 2008 was adversely affected by the global economic crisis. Growth in export receipts slowed down significantly in the last quarter of the year. Total exports grew by 7.2 percent, reaching US$ 4,818.3 million, compared to growth of 13 percent in 2007. Imports increased significantly, growing by 29.7 percent to US$ 5,202.1 million. As a result, the current account deficit including capital grants widened to US$ 1,379 million or 9.1 percent of GDP from a deficit of US$ 494.2 million or 2.4 percent of GDP recorded in 2007. 29. Sir, metal export receipts were US$ 3,885.1 million in 2008, representing a growth of 5.9 percent from 2007. Non-traditional exports registered further growth in 2008, growing by 12.9 percent to US$ 933.2 million. The share of non-traditional exports in total export receipts grew to 19.4 percent from 18.4 percent in 2007. 30. Mr. Speaker, the Government continued with its commitment to prudent management of its foreign debt. As a result, the contracting of additional foreign debt was contained within sustainable levels. Preliminary estimates indicate that the total stock of Government foreign debt as at end 2008 was US$ 1,093.5 million, a marginal increase of 3.7 percent from US$ 1,054.5 million recorded at the end of 2007. A total of US$ 132 million in new loans were contracted during 2008, with disbursement commencing this year. Budget Performance in 2008 31. Mr. Speaker, the overall objective of the Government in 2008 was to continue consolidating fiscal discipline by maintaining lower levels of borrowing and improving budget execution. Despite a number of challenges faced in budget execution during the year, overall budget performance was satisfactory. 32. Sir, the Government was faced with a number of unexpected events such as the larger than planned civil service wage award, the need to hold the Presidential elections, the need to augment resources to the Fertiliser Support Programme in the face of record high fertiliser prices, and the need to finance the ZESCO power rehabilitation project. These events exerted significant expenditure pressures, requiring a reallocation of resources to meet these new demands, while remaining within the planned budget deficit. 33. Mr. Speaker, for the year 2008, total expenditures amounted to K13,402.6 billion against the target of K13,761.4 billion. On the other hand, total domestic revenue collections and foreign grant receipts, excluding revenues from the new mining tax regime, were K12,008.2 billion, and were marginally below the target of K12,106.4 billion. The deficit of K1,394.3 billion was financed through domestic borrowing of K811.6 billion and foreign financing of K582.7 billion. 34. Mr. Speaker, domestic revenue collections in 2008 amounted to K9,918.1 billion. This was above the target of K9,828.5 billion and represented 18.5 percent of GDP. Of this amount, tax revenues amounted to K9,350.9 billion, and were 2.4 percent above target. Non-tax revenues totalled K567.3 billion, and were 18.4 percent below the target of K694.9 billion. 35. Sir, from the new mining tax regime, the Government expected to collect K917.3 billion by end-December 2008. Collections however were much lower at K319.5 billion, representing a 65 percent under-collection. This was mainly on account of administrative challenges in implementing the regime during the year. 36. Mr. Speaker, grant receipts from our cooperating partners totalled K2,090.1 billion against the projected amount of K2,277.9 billion, representing a shortfall of 8.2 percent. 37. Mr. Speaker, total expenditures in 2008, excluding foreign financed projects, amounted to K11,518.0 billion. Categorised by function, General Public Services accounted for the highest share at 33.8 percent, while Education and Health combined followed at 27.9 percent. Economic Affairs accounted for 15.0 percent, while the balance of 23.3 percent went to Housing and Community Amenities; Defence; Public Order and Safety; Social Protection and others. PART III ECONOMIC POLICIES IN 2009 Macroeconomic Policies 38. Mr. Speaker, as a result of weakening global demand, the global economy will, beyond doubt, negatively impact our economy and constrain our efforts to reduce poverty. Our growth and export prospects will be affected, and job losses may be inevitable. 39. Sir, in the wake of this daunting challenge, we must remain resolute and ensure that the fundamental policies that have contributed to our recent growth and macroeconomic stability are continued. At the same time, we must meet these new challenges by acting decisively to encourage the rapid diversification of the economy, and safeguard vital social services to cushion the impact of the crisis on our people. 40. Mr. Speaker, the broad macroeconomic targets for this year are therefore to: (a) achieve growth of 5 percent; (b) lower inflation to 10 percent; and (c) limit domestic borrowing to 1.8 percent of GDP. 41. Mr. Speaker, in order to achieve this growth objective, the Government will promote diversification and enhance national competitiveness through structural reforms and infrastructure development. Emphasis will be placed on agricultural development, tourism infrastructure development, and the promotion of the manufacturing sector. 42. Mr. Speaker, the performance of the external sector is expected to be challenging in 2009. Our export receipts are expected to be significantly lower than in previous years due to the fall in world copper prices. This will adversely affect our balance of payments. Mr. Speaker, this problem is compounded by our continued dependence on a single major export commodity. Monetary and Financial Sector Policies 43. Mr. Speaker, monetary policy in 2009 will focus on maintaining macroeconomic stability in the wake of the global financial and economic crises. In this regard, monetary and supervisory policies will be reviewed to take account of ongoing developments in the domestic and global financial markets. 44. Sir, in order to curtail inflationary effects, a key challenge will be to ensure the steady supply of food and fuel in the country. The Government has already begun to make available relatively cheaper maize throughout the country. In addition, oil prices this year are expected to remain lower than those seen in 2008, helping to keep the general price level down. 45. Sir, the Government is cognizant of the risks facing the financial sector as a result of the global financial crisis. In this regard, the Bank of Zambia will continue to closely monitor these developments and take appropriate measures to safeguard the domestic financial system. Fiscal Policy 46. Mr. Speaker, fiscal policy in 2009 will be geared towards increasing expenditure on infrastructure and social services, in line with the Government’s objectives of encouraging diversification and enhancing competitiveness. In light of constrained revenues, this will be achieved through a realignment of resources, and an increase in borrowing. Domestic borrowing will therefore increase to 1.8 percent of GDP from 1.4 percent of GDP in 2008. This modest increase in domestic borrowing reflects the Government’s cognisance of the need to borrow prudently in order to preserve macroeconomic stability. Foreign Debt Policy 47. Mr. Speaker, the Government will continue to borrow from bilateral and multilateral institutions in the form of highly concessional budget support and project loans. These loans will finance key expenditures in priority areas such as water and sanitation, energy, and road infrastructure. Although the Government’s preference is to contract concessional loans, non-concessional borrowing will also be considered for commercially viable projects in priority sectors such as energy. Structural Reforms Competitiveness 48. Mr. Speaker, one of the key pre-requisites for improving the external competitiveness of the economy is reducing the cost of doing business. Currently, the cost of doing business in Zambia is relatively high, and is due to a number of factors, such as a cumbersome licensing and regulatory framework, poor infrastructure, and high transport and communication costs. The policy and commitment of this Government is to reduce these costs. The Government will therefore step up the regulatory reform process this year so as to achieve a simpler and easier business-licensing regime. Infrastructural Development through Public-Private Partnerships 49. Mr. Speaker, a significant constraint to growth in the economy has been the slow pace of development in large infrastructure projects. This is partly due to constrained public finances and limited participation by the private sector. In order to accelerate the development of infrastructure in the country, the Government launched the Public Private Partnership Policy in 2008. 50. Sir, a Bill will be introduced in Parliament this year to provide the necessary legal framework to support the implementation of this policy. Through you Mr. Speaker, I implore Honourable Members to support this important bill when it is introduced in this House. Decentralisation 51. Mr. Speaker, the Government is committed to extending the benefits of growth and development across the whole nation. The Government intends to achieve this through the devolution of appropriate service delivery functions to local authorities. As emphasised by His Excellency the President in his address to this august House, the Government will work towards adopting the Decentralisation Implementation Plan and craft a new partnership with the local authorities. 52. Sir, in this regard, a local government capacity building programme will be developed this year, equipping local councils with the human, technical and financial capacity to effectively deliver quality and responsive services. This is critical in ensuring that the benefits of growth are shared. Further, work will be initiated to restructure the financial flows between Central Government and local authorities, so that the implementation of the National Decentralisation Policy can be expedited. PART IV THE 2009 BUDGET 53. Mr. Speaker, I now present the overall budget for 2009. First I outline expenditures by function. I then discuss sector policies and supporting expenditures. Finally, I discuss revenue measures. 54. Sir, although we are in the middle of a global financial and economic crisis, there are still large numbers of investors, both local and foreign, that continue to look for potential investment opportunities. It is therefore important that we sustain the higher levels of investment, particularly Foreign Direct Investment that Zambia has seen over the last few years. It is with this in mind that this budget will focus on improving infrastructure and creating a more conducive environment for investors, while reducing wasteful expenditures that do not carry an appreciable social or economic return. 55. Mr. Speaker, in 2009 the Government intends to spend K15,279.0 billion or 25.4 percent of GDP. Of this, K10,645.9 billion or 69.7 percent will be financed from domestic revenues while K2,768.7 billion or 18.1 percent will be financed by grants from co-operating partners. The balance of K1,864.5 billion or 12.2 percent of total expenditure will be financed through domestic borrowing of K1,069.0 billion or 1.8 percent of GDP and external borrowing of K795.5 billion or 1.3 percent of GDP. Expenditure By Functional Classification 56. Mr. Speaker, the General Public Services function accounts for the highest proportion of total expenditure at 31.8 percent, compared to 32.8 percent in 2008. This is followed by the Economic Affairs function at 19.8 percent, compared to 16.7 percent in 2008. The Education and Health functions account for significant shares of the budget at 17.2 and 11.9 percent, compared to 15.4 and 11.5 percent in 2008, respectively. 57. Mr. Speaker, the detailed expenditures for 2009, categorised by function, are as follows:
2009 Total Budget Allocation by Function and Sub function: FUNCTION AND SUB FUNCTIONAllocation (K' Billion)% of Total Budget General Public Services4,865.531.8Executive 438.7 Legislation 453.8 o/w National Constitution Conference 50.0 General Government Services 3,638.9 o/w Dismantling of Arrears 248.5 Domestic Debt Interest 978.8 External Debt 372.0 Compensation and Awards 173.1 Centralised Administrative Services 334.1 o/w Public Service Retrenchment Programme 43.0 Defence 1,068.0 7.0Public Order and Safety610.74.0Economic Affairs3,021.219.8General Economic, Commercial, and Labour 169.1 Agriculture, Forestry and Fishing 1,096.3 o/w Fertiliser Support Programme 435.0 Strategic Food Reserve 100.0 Livestock Development 70.7
...
1. Mr. Speaker, I beg to move that the House do now resolve into Committee of Supply on the Estimates of Revenue and Expenditure for the year 1st January 2009 to 31st December 2009 presented to the National Assembly in January 2009. 2. Sir, I am the bearer of a message from His Excellency the President recommending favourable consideration of the motion that I now lay on the Table. 3. Mr. Speaker, as I begin this budget speech, I wish to acknowledge the macroeconomic achievements that Zambia attained when the economy was under the stewardship of my predecessor, Honourable Ng’andu Magande, MP. I would also like to pay tribute to the late Honourable Emmanuel Kasonde, who twice served as Minister of Finance, and laid the foundation for the liberalisation of the Zambian economy. 4. Mr. Speaker, I present this budget at a time of great uncertainty in the world economy. The global economy is under severe strain, with recession in several advanced economies, and significantly slower growth in emerging countries. Recent developments in the mining sector have demonstrated that Zambia is also vulnerable to this crisis. These events have had a significant influence on our thinking, and therefore the preparation of this year’s budget. 5. Sir, despite these unprecedented challenges, my vision is that of a prosperous Zambia. I see a vibrant and diversified economy where hard work and the spirit of entrepreneurship are rewarded. This economy will be one that provides ample opportunity for every citizen to realize their potential and fully provide for their families. I see all our citizens, in all corners of our country, waking up each morning well nourished, in decent housing, with access to clean water and sanitation. I see our citizens having paved roads that do not flood each rainy season, reliable and renewable energy, and high quality health and education services that are within easy reach. 6. Mr. Speaker, this is the vision of Zambia that I have as I present this budget. 7. Sir, in order to realise this vision, it is critical that we build on the achievements already registered under various economic diversification programmes the Government has pursued over the years. We cannot afford to slow down on these programmes as the risks of dependency on the mining sector have once again come to the fore during the current global economic crisis. Sir, our country has abundant opportunities for diversification, and it is time for us to accelerate our efforts to harness them. 8. Sir, just as we expect citizens to work hard to drive our economy forward, they expect Government to play its role in creating a conducive and competitive environment for wealth creation and poverty reduction in every part of our country. 9. Mr. Speaker, in view of the urgent need for accelerated diversification and enhanced competitiveness, the theme for this year’s Budget is “Enhancing growth through competitiveness and diversification.” 10. Mr. Speaker, my address this afternoon follows a slightly different pattern from previous years in order to bring together Government’s policy objectives and budgetary allocations for 2009. This will enable both Honourable Members as well as the public at large to better appreciate the underlying rationale behind this Budget. 11. This Budget address therefore contains five parts. In Part I, I give an overview of the performance of the global economy during the past year. In Part II, I discuss developments in the Zambian economy during 2008. In Part III, I detail the underlying policy measures that will guide the Budget. In part IV, I present the 2009 Budget and supporting Policy, Expenditure and Revenue measures. Finally, in Part V, I conclude my address. PART I DEVELOPMENTS IN THE GLOBAL ECONOMY 12. Mr. Speaker, preliminary data indicate that global economic growth in 2008 slowed to 2.5 percent from 3.7 percent in 2007. This was on account of the onset of recession in advanced economies in the last two quarters of the year, triggered by the turbulence in the financial markets of these economies. 13. Sir, emerging economies such as Brazil, Russia, India, and China continued to drive global growth in 2008. However, growth in these economies was significantly dampened as a result of the global economic crisis. 14. Sir, Sub-Saharan Africa’s limited integration with the global financial system saw the continent posting more robust growth compared to advanced economies. Growth in the region was projected to be 5.4 percent compared with the 1.3 percent growth recorded in advanced economies. 15. Mr. Speaker, a significant consequence of the global financial crisis was the dramatic collapse of commodity prices in 2008. Oil prices, which reached record highs of US$ 147 per barrel in July, fell significantly to US$ 48 per barrel at the end of the year. Similarly, copper prices reached a record high of US$ 8,985 per tonne in July, before plummeting to US$ 2,902 by the close of the year, representing a 67.7 percent fall. Prices for other key commodities such as fertiliser also followed similar trends during the year. 16. Sir, on the inflationary front, fuel and food prices were high in the first half of the year, contributing significantly to inflationary pressures around the World. These inflationary pressures were acutely felt in developing countries, including sub-Saharan Africa where inflation rose to 11.7 percent from 7.1 percent in 2007. However, by the close of the year, inflationary pressures began to subside, due to the significant shrinkage in global demand. 17. Mr. Speaker, these global developments had some negative effects on the domestic economy, adversely affecting growth, inflation, the exchange rate and the terms of trade. PART II DEVELOPMENTS IN THE DOMESTIC ECONOMY IN 2008 Macroeconomic Performance 18. Mr. Speaker, in order to reduce poverty, the Government targeted an average annual growth rate of 7 percent over the Fifth National Development Plan (FNDP) period. Over the period 2006-2008, real Gross Domestic Product (GDP) growth averaged 6.1 percent per annum, which while robust, was below the FNDP target. 19. Sir, macroeconomic performance in 2008 was weaker due to unprecedented global and domestic events. As a result, growth was lower than projected, whilst inflation and interest rates were higher. Preliminary estimates indicate that the Zambian economy grew by 5.8 percent in 2008. This performance was mainly driven by growth in the transport, storage and communication; mining; manufacturing; and trade sectors. However, this was lower than the 6.3 percent achieved in 2007. The poor performance of the agricultural sector, and a slowdown in the construction sector contributed to the lower than expected growth. 20. Although the mining sector registered positive growth, it was affected by a sharp fall in world copper prices in the second half of the year, thereby dampening the prospects of higher growth and profitability. The agriculture sector, which employs the largest share of our workforce, experienced negative growth on account of heavy rains that resulted in flooding in some areas, thereby destroying crops. However Mr. Speaker, the country recorded a food surplus. 21. Mr. Speaker, Government policy with regard to inflation in 2008 and over the FNDP period is to achieve and sustain single digit inflation. In the last three years, this has generally been achieved with inflation outturns of 8.2 percent and 8.9 percent, in 2006 and 2007, respectively. However, the pass-through effects of high international oil and food prices resulted in the inflation outturn for 2008 being significantly higher at 16.6 percent against the target of 7 percent. Food inflation in particular, accelerated to 20.5 percent compared with 5.9 percent in 2007. 22. Sir, the exchange rate was also affected by the effects of the global financial crisis. This resulted in the sharp depreciation and increased volatility of the exchange rate of the Kwacha, particularly in the last quarter of the year. The Kwacha depreciated by 27.3 percent against the US dollar to an average rate of K4,882 in December 2008 compared to K3,835 in December 2007. However, the Kwacha appreciated by 6.3 percent and 11.1 percent against the Pound Sterling and South African Rand, respectively, reflecting their weakening against the US Dollar. 23. Mr. Speaker, an important macroeconomic objective over the FNDP period has been to maintain a prudent fiscal policy. In spite of a number of challenges, both domestic and external, I wish to report that the budget deficit for 2008 was favourable and stood at K1,394.3 billion or 2.7 percent of GDP, and was below the projected deficit of 3.0 percent. Monetary and Financial Developments 24. Mr. Speaker, on the monetary front, broad money growth slowed down to 22.1 percent in December 2008 from 25.9 percent in December 2007. This was a result of a slowing external sector performance, and a lower than expected build up of international reserves. However, growth in credit to the private sector in 2008 remained unchanged at 44 percent. 25. Sir, interest rates on Government securities increased due to the inflationary environment that prevailed for most of the year. This was compounded by reduced demand for Government securities as a result of withdrawals, especially by foreign portfolio investors. The weighted average Treasury-bill interest rate increased to an average of 17.2 percent in December 2008 from 12.9 percent in December 2007. Similarly, the interest rates on Government bonds rose, with the composite bond rate closing the year at an average of 16.7 percent from 15.6 percent in December 2007. 26. Sir, as a result, the average commercial bank lending rate increased in line with the increases observed in Government securities, rising to 26.9 percent, from 24.4 percent in 2007. 27. Mr. Speaker, the performance of the equity market was also affected by the global financial crisis. The Lusaka Stock Exchange All Share Index declined by 29.2 percent during the year. Despite this downturn, market capitalisation increased by 13.9 percent to K20,468 billion, mainly on account of the initial public offering of Zanaco and Celtel shares. Sir, the listing of local companies on capital markets is in line with Government’s policy of empowering Zambians to own shares. External Sector Performance 28. Mr. Speaker, the country’s balance of payments position in 2008 was adversely affected by the global economic crisis. Growth in export receipts slowed down significantly in the last quarter of the year. Total exports grew by 7.2 percent, reaching US$ 4,818.3 million, compared to growth of 13 percent in 2007. Imports increased significantly, growing by 29.7 percent to US$ 5,202.1 million. As a result, the current account deficit including capital grants widened to US$ 1,379 million or 9.1 percent of GDP from a deficit of US$ 494.2 million or 2.4 percent of GDP recorded in 2007. 29. Sir, metal export receipts were US$ 3,885.1 million in 2008, representing a growth of 5.9 percent from 2007. Non-traditional exports registered further growth in 2008, growing by 12.9 percent to US$ 933.2 million. The share of non-traditional exports in total export receipts grew to 19.4 percent from 18.4 percent in 2007. 30. Mr. Speaker, the Government continued with its commitment to prudent management of its foreign debt. As a result, the contracting of additional foreign debt was contained within sustainable levels. Preliminary estimates indicate that the total stock of Government foreign debt as at end 2008 was US$ 1,093.5 million, a marginal increase of 3.7 percent from US$ 1,054.5 million recorded at the end of 2007. A total of US$ 132 million in new loans were contracted during 2008, with disbursement commencing this year. Budget Performance in 2008 31. Mr. Speaker, the overall objective of the Government in 2008 was to continue consolidating fiscal discipline by maintaining lower levels of borrowing and improving budget execution. Despite a number of challenges faced in budget execution during the year, overall budget performance was satisfactory. 32. Sir, the Government was faced with a number of unexpected events such as the larger than planned civil service wage award, the need to hold the Presidential elections, the need to augment resources to the Fertiliser Support Programme in the face of record high fertiliser prices, and the need to finance the ZESCO power rehabilitation project. These events exerted significant expenditure pressures, requiring a reallocation of resources to meet these new demands, while remaining within the planned budget deficit. 33. Mr. Speaker, for the year 2008, total expenditures amounted to K13,402.6 billion against the target of K13,761.4 billion. On the other hand, total domestic revenue collections and foreign grant receipts, excluding revenues from the new mining tax regime, were K12,008.2 billion, and were marginally below the target of K12,106.4 billion. The deficit of K1,394.3 billion was financed through domestic borrowing of K811.6 billion and foreign financing of K582.7 billion. 34. Mr. Speaker, domestic revenue collections in 2008 amounted to K9,918.1 billion. This was above the target of K9,828.5 billion and represented 18.5 percent of GDP. Of this amount, tax revenues amounted to K9,350.9 billion, and were 2.4 percent above target. Non-tax revenues totalled K567.3 billion, and were 18.4 percent below the target of K694.9 billion. 35. Sir, from the new mining tax regime, the Government expected to collect K917.3 billion by end-December 2008. Collections however were much lower at K319.5 billion, representing a 65 percent under-collection. This was mainly on account of administrative challenges in implementing the regime during the year. 36. Mr. Speaker, grant receipts from our cooperating partners totalled K2,090.1 billion against the projected amount of K2,277.9 billion, representing a shortfall of 8.2 percent. 37. Mr. Speaker, total expenditures in 2008, excluding foreign financed projects, amounted to K11,518.0 billion. Categorised by function, General Public Services accounted for the highest share at 33.8 percent, while Education and Health combined followed at 27.9 percent. Economic Affairs accounted for 15.0 percent, while the balance of 23.3 percent went to Housing and Community Amenities; Defence; Public Order and Safety; Social Protection and others. PART III ECONOMIC POLICIES IN 2009 Macroeconomic Policies 38. Mr. Speaker, as a result of weakening global demand, the global economy will, beyond doubt, negatively impact our economy and constrain our efforts to reduce poverty. Our growth and export prospects will be affected, and job losses may be inevitable. 39. Sir, in the wake of this daunting challenge, we must remain resolute and ensure that the fundamental policies that have contributed to our recent growth and macroeconomic stability are continued. At the same time, we must meet these new challenges by acting decisively to encourage the rapid diversification of the economy, and safeguard vital social services to cushion the impact of the crisis on our people. 40. Mr. Speaker, the broad macroeconomic targets for this year are therefore to: (a) achieve growth of 5 percent; (b) lower inflation to 10 percent; and (c) limit domestic borrowing to 1.8 percent of GDP. 41. Mr. Speaker, in order to achieve this growth objective, the Government will promote diversification and enhance national competitiveness through structural reforms and infrastructure development. Emphasis will be placed on agricultural development, tourism infrastructure development, and the promotion of the manufacturing sector. 42. Mr. Speaker, the performance of the external sector is expected to be challenging in 2009. Our export receipts are expected to be significantly lower than in previous years due to the fall in world copper prices. This will adversely affect our balance of payments. Mr. Speaker, this problem is compounded by our continued dependence on a single major export commodity. Monetary and Financial Sector Policies 43. Mr. Speaker, monetary policy in 2009 will focus on maintaining macroeconomic stability in the wake of the global financial and economic crises. In this regard, monetary and supervisory policies will be reviewed to take account of ongoing developments in the domestic and global financial markets. 44. Sir, in order to curtail inflationary effects, a key challenge will be to ensure the steady supply of food and fuel in the country. The Government has already begun to make available relatively cheaper maize throughout the country. In addition, oil prices this year are expected to remain lower than those seen in 2008, helping to keep the general price level down. 45. Sir, the Government is cognizant of the risks facing the financial sector as a result of the global financial crisis. In this regard, the Bank of Zambia will continue to closely monitor these developments and take appropriate measures to safeguard the domestic financial system. Fiscal Policy 46. Mr. Speaker, fiscal policy in 2009 will be geared towards increasing expenditure on infrastructure and social services, in line with the Government’s objectives of encouraging diversification and enhancing competitiveness. In light of constrained revenues, this will be achieved through a realignment of resources, and an increase in borrowing. Domestic borrowing will therefore increase to 1.8 percent of GDP from 1.4 percent of GDP in 2008. This modest increase in domestic borrowing reflects the Government’s cognisance of the need to borrow prudently in order to preserve macroeconomic stability. Foreign Debt Policy 47. Mr. Speaker, the Government will continue to borrow from bilateral and multilateral institutions in the form of highly concessional budget support and project loans. These loans will finance key expenditures in priority areas such as water and sanitation, energy, and road infrastructure. Although the Government’s preference is to contract concessional loans, non-concessional borrowing will also be considered for commercially viable projects in priority sectors such as energy. Structural Reforms Competitiveness 48. Mr. Speaker, one of the key pre-requisites for improving the external competitiveness of the economy is reducing the cost of doing business. Currently, the cost of doing business in Zambia is relatively high, and is due to a number of factors, such as a cumbersome licensing and regulatory framework, poor infrastructure, and high transport and communication costs. The policy and commitment of this Government is to reduce these costs. The Government will therefore step up the regulatory reform process this year so as to achieve a simpler and easier business-licensing regime. Infrastructural Development through Public-Private Partnerships 49. Mr. Speaker, a significant constraint to growth in the economy has been the slow pace of development in large infrastructure projects. This is partly due to constrained public finances and limited participation by the private sector. In order to accelerate the development of infrastructure in the country, the Government launched the Public Private Partnership Policy in 2008. 50. Sir, a Bill will be introduced in Parliament this year to provide the necessary legal framework to support the implementation of this policy. Through you Mr. Speaker, I implore Honourable Members to support this important bill when it is introduced in this House. Decentralisation 51. Mr. Speaker, the Government is committed to extending the benefits of growth and development across the whole nation. The Government intends to achieve this through the devolution of appropriate service delivery functions to local authorities. As emphasised by His Excellency the President in his address to this august House, the Government will work towards adopting the Decentralisation Implementation Plan and craft a new partnership with the local authorities. 52. Sir, in this regard, a local government capacity building programme will be developed this year, equipping local councils with the human, technical and financial capacity to effectively deliver quality and responsive services. This is critical in ensuring that the benefits of growth are shared. Further, work will be initiated to restructure the financial flows between Central Government and local authorities, so that the implementation of the National Decentralisation Policy can be expedited. PART IV THE 2009 BUDGET 53. Mr. Speaker, I now present the overall budget for 2009. First I outline expenditures by function. I then discuss sector policies and supporting expenditures. Finally, I discuss revenue measures. 54. Sir, although we are in the middle of a global financial and economic crisis, there are still large numbers of investors, both local and foreign, that continue to look for potential investment opportunities. It is therefore important that we sustain the higher levels of investment, particularly Foreign Direct Investment that Zambia has seen over the last few years. It is with this in mind that this budget will focus on improving infrastructure and creating a more conducive environment for investors, while reducing wasteful expenditures that do not carry an appreciable social or economic return. 55. Mr. Speaker, in 2009 the Government intends to spend K15,279.0 billion or 25.4 percent of GDP. Of this, K10,645.9 billion or 69.7 percent will be financed from domestic revenues while K2,768.7 billion or 18.1 percent will be financed by grants from co-operating partners. The balance of K1,864.5 billion or 12.2 percent of total expenditure will be financed through domestic borrowing of K1,069.0 billion or 1.8 percent of GDP and external borrowing of K795.5 billion or 1.3 percent of GDP. Expenditure By Functional Classification 56. Mr. Speaker, the General Public Services function accounts for the highest proportion of total expenditure at 31.8 percent, compared to 32.8 percent in 2008. This is followed by the Economic Affairs function at 19.8 percent, compared to 16.7 percent in 2008. The Education and Health functions account for significant shares of the budget at 17.2 and 11.9 percent, compared to 15.4 and 11.5 percent in 2008, respectively. 57. Mr. Speaker, the detailed expenditures for 2009, categorised by function, are as follows:
2009 Total Budget Allocation by Function and Sub function: FUNCTION AND SUB FUNCTIONAllocation (K' Billion)% of Total Budget General Public Services4,865.531.8Executive 438.7 Legislation 453.8 o/w National Constitution Conference 50.0 General Government Services 3,638.9 o/w Dismantling of Arrears 248.5 Domestic Debt Interest 978.8 External Debt 372.0 Compensation and Awards 173.1 Centralised Administrative Services 334.1 o/w Public Service Retrenchment Programme 43.0 Defence 1,068.0 7.0Public Order and Safety610.74.0Economic Affairs3,021.219.8General Economic, Commercial, and Labour 169.1 Agriculture, Forestry and Fishing 1,096.3 o/w Fertiliser Support Programme 435.0 Strategic Food Reserve 100.0 Livestock Development 70.7
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Monday, February 2, 2009
Journey to 2030! what is the role of Government, you, the citizen not forgeting the foreigner investors?
The country want to be a paradise by 2030 as dubbed in the vision 2030 whose goal is to make the country a middle income one. The question which keeps begging is, when will the country invest in proper buildings to avoid the mess of make shift structures like the one (above) dipicting trading life at old Soweto market.
Sunday, February 1, 2009
SOUTH AFRICA GOSPEL ARTIST REBBECA MALOPE IS NOT ONLY LOVED BY ZAMBIANS BUT THE WORLD AS WELL! her ever wide smile tells it all.
Erand Pictures blog host Darling with South Africa cheerished gospel singer Rebbecca Malope in Lusaka(2008) ahead of the Zain Sporsored Gospel Awards.This was after a media press briefing, Southern SunRidgeway Hotel famous known as Holiday Inn.
Defence force at Cathdral of Holy cross, Lusaka 2008
Defence forces draw also strength from GOD. here at a church service at Cathedral of Holy Cross in Lusaka participate in a church service.
Obama relaxing with his family
If you believe in Jesus, All is possible even the presidency of America despite your roots!!!!
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