DPP brands 2023/24 budget unrealistic

Opposition Democratic Progressive Party (DPP) says the K3.87 trillion 2023/24 proposed National Budget is unrealistic as it has failed to address root causes of the country’s economic crisis.

Presenting the party’s response to the 2023/24 National Budget in Parliament yesterday, DPP spokesperson on Finance Ralph Jooma said the budget has failed to address intermittent power supply, scarcity of foreign exchange and unsustainable debt stock level challenges.

He said while a revenue target of K2.5 trillion is as good as “dead on arrival”, financing the fiscal deficit of  K1.3 trillion which is equivalent to one third of the K3.87 trillion budget is very risky because its implementation will solemnly depend on the money that will come.

Jooma said: “A budget anchored by unrealistic assumptions of 2.7 percent gross domestic product [GDP] growth in 2023 and 3.2 percent growth in 2024 lacks credibility.

“Madam Speaker, we all know that our situation of lack of forex and persistent blackouts has not changed. Even attempts to change this situation have not been made.

“The sad thing is that, when resources are not realised, it is the critical budget lines that tend to suffer. Once we begin to choose and pick what to implement and what not to, due to inadequacy of realised revenues, we inadvertently begin to misalign our budget.”

He observed that the development budget, pegged at K896.21 billion or 5.9 percent of GDP and 23.1 percent of the total expenditure, falls short of the 25 percent threshold.

“From experience, we also know that real implementation will not exceed 75% of the allocation.  What it means is that this is a highly consumption budget,”said Jooma who is Mangochi Monkey Bay legislator.

At K1.3 trillion, the fiscal deficit is 8.7 percent of GDP and below the recommended threshold of three percent.

The deficit, which counters to one of the budget objectives of containing the deficit, is also coming on the back of rising public debt, now at K8.3 trillion as at December 2022, with interest payments pegged at K917.9 billion.

During the last year of DPP administration in 2019/20 financial year, public debt was at around K4 trillion while annual interest was K250 billion.

But Jooma said debt in the 2023/24 financial year is projected to rise to K9.3 trillion with annual interest skyrocketing to nearly K1 trillion.

He said: “On debt restructuring and management, the minister [of Finance and Economic Affairs Sosten Gwengwe] said government would re-finance all expensive and near-maturing debt using cheaper debt.

“Yet what we are seeing is a simple rollover of debts. In fact our public debt, which is 66 percent of total projected tax revenues, is obviously in distress.”

Jooma further said government is failing to be exemplary and; hence, failing to secure patriotism from its citizens because of lack of discipline.

In his 2023/24 budget statement, Gwengwe said government continues to ensure that the fiscal deficit is minimised to the extent possible.

He also agreed that the pace of borrowing is unsustainable and needs to be curtailed, saying “That can only be done by ensuring that most of our expenditures are met from our domestic resources”

Parliament is currently debating the proposed budget expected to roll out on April 1.