04 Feb 2019

The domestic economy has sustained a judicious and stable macroeconomic policy environment with appropriate fiscal and monetary policies during the past years, Parliament has been told. 

Presenting the 2019/2020 budget speech on February 4, the Minister of Finance and Economic Development Mr Kenneth Matambo said the environment was characterised by low debt level, stable inflation and high gross national savings as a per cent of Gross Domestic Product.

He explained that through prudent management of resources, government continues to ensure that the bulk of the mineral revenue was invested in human and physical capital while the balance was saved for future generations. 

“Creating such a conducive environment for development is a deliberate effort by the government to promote development of the private sector, which should be the source of economic growth and creation of employment opportunities, especially for the youth, said Mr Matambo.

In addition to maintaining macroeconomic stability, minister Matambo said government had over the years pursued specific strategies to promote economic growth that had potential to create employment opportunities.

This, he said, included pursuing economic diversification, promoting private sector development, and development of human capital and physical infrastructure network. 

He said while the country had recorded significant achievements in most of these areas, there was need for continued consolidation in some of them in order to transform the economy from its current upper middle-income to high income status by 2036. 

He therefore, said government would  continue, through the 2019/2020 budget, to implement various programmes and projects aimed at preparing the economy for transformation. 

Mr Matambo further stated that efforts by government to diversify the domestic economy continued to yield positive results as evidenced by the decline in the share of mining sector in the value addition, with a corresponding increase in the contribution of the non-mining sectors. 

He said the mining sector’s share to the gross domestic product declined from 25 per cent in 2008 to 18 per cent in 2018, while the contribution of non-mining sectors increased from 75 per cent to 82 per cent over the same period. 

He said it was consistent with government’s efforts to reduce the dependence of the economy on the mining sector, which is susceptible to external shocks.

Mr Matambo stated however, that there was need to intensify efforts to diversify the country’s exports and government revenue sources.  

He said diamond exports continued to dominate the trade account, while mineral and customs revenues account for over two thirds of government revenue. 

Mr Matambo stated that the country’s dependency on one commodity for exports and two major sources of revenues poses a systematic risk, hence government pledges to continue with efforts to diversify the economy in general, and its exports and government revenue, in particular. Ends