26 Oct 2016

The Minister of Finance and Economic Development Mr Kenneth Matambo has projected a cumulative budget surplus of P1.05 billion during National Development Plan (NDP) 11 as the government continues to tackle unemployment amid slowed economic growth.  

Presenting the Draft NDP 11 before Parliament on Wednesday (October 26), Minister Matambo said real GDP growth was expected to grow at 4.4 per cent per annum with the mining sector growing at an annual average of 2.8 per cent during the plan period.

The plan covers a six year period from April 1, 2017 to 31 March, 2023 under the theme, “Inclusive Growth for Realisation of Employment Creation and Poverty Eradication”.

Minister Matambo said non-mining sectors were expected to grow modestly by 4.6 per cent annually.

“On an annual basis, total revenues at the onset of NDP 11 are estimated to be P52.76 billion, and will grow by an average of 6.7 per cent, reaching P70.78 billion in 2022/23,” he said.

He said total revenues to be generated for the entire plan are projected to be P365.08 billion.

“Mineral revenues are expected to contribute a large share to total revenue of about 34.1 per cent during the plan period,” he said.

Total expenditure and net lending was projected to reach P364.03 billion of which P262.4 billion would be for recurrent and P101.4 billion earmarked for development, resulting in a modest cumulative estimated budget surplus of only P1.05 billion by end of NDP 11.

The minister said due to the uncertainty in the global economy and the need to create employment opportunities through increased spending, the budget was projected to be in deficits in the first half of the plan, but forecast to only record surpluses in the last three years.

“It is important to note that the projected non-mineral revenues of P240.24 billion are lower than the projected recurrent budget of P262.4 billion,” the minister said adding it was suggesting possible non-sustainability of the projected NDP 11 budget, as the recurrent expenditure would not be fully financed from the non-mineral revenue source.

Minister Matambo said this called for continued measures to strengthen tax administration through simplification and strengthening of tax collection systems as well as implementation of cost recovery measures.

He proposed a Fiscal Rule aimed at financing the recurrent budget from non-mineral revenues, and to invest 60 per cent of mineral revenues in physical and human capital while the remaining 40 per cent would be saved as financial assets for future generations.

Meanwhile, the minister has said the liquidation of BCL Group of Companies would have minimal direct impact in economic growth hence macroeconomic variables such as GDP and government revenues contained in the draft plan remained valid.

“Without doubt, the liquidation of the BCL Group of Companies will have economic and social implications, especially on employment,” he said adding they would continue to monitor any developments with regard to BCL liquidation process with a view of updating macroeconomic projections if necessary. ENDS