Matambo forecasts P8bn budget deficit for 2018
Pauline Dikuelo | Wednesday September 27, 2017 18:00
The estimates are contained in the Budget Strategy Paper, a blueprint for the budget produced annually at least three months before the Budget Speech.
The Paper is usually discussed at three dipitso before final ministerial feedback and submission of the proposed budget to Cabinet in December, ahead of the speech in February. Briefing stakeholders at the first pitso yesterday, Finance Minister, Kenneth Matambo said government was concerned about the widening budget deficits and would tighten spending supervision next year and beyond.
The latest revisions of the 2017-2018 budget point to a deficit of P6.6 billion due by March 2018, while the 2016-2017 budget is now projected to turn a small surplus from the initial expectation of a P1.1 billion.
While the government had anticipated running budget deficits for the first three financial years of NDP 11, the steep fall to P8 billion has rattled fiscal authorities.
The 2018-2019 budget will be the second under NDP 11, which ends in March 2023.
The forecast deficit for the next financial year is equal to minus four percent of the gross domestic product (GDP).
“We have agreed as government that as long as we don’t go beyond that four percent of the GDP, we should be comfortable,” Matambo told stakeholders. “But once we are beyond that, we would be very, very worried.”
He added: “However, the figure of P8 billion is an estimate and we hope that as we prepare the budget, we will do our best so that by February, that figure is lower than that”.
The government will fund the deficit through domestic and external borrowings, as well as drawdown on foreign reserves, which by June 2017 were pegged at P74.7 billion.
The portion of the reserves available to government equalled P30.6 billion by June.
According to the Ministry’s secretary, Economic and Financial Policy, Dr Taufila Nyamadzabo, a positive outlook is anticipated in the medium term, underpinned by growth in the services sector which is expected to reach 4.7% in 2017 and 5.3% in 2018.
“Government would continue to strengthen diversification efforts through establishing special economic zones as well as improving water, energy, transport and communications infrastructure,” he said.
He added that several initiatives and programmes are planned for implementation in the 2018-2019 under this national priority area, some of which include clean water and sanitation programmes, fast tracking the National Spatial Plan, which is intended to provide robust spatial solutions to socio-economic development.