On 29th September, 2017, Zambia’s Minister of Finance, Honourable Felix C. Mutati, MP, presented to the National Assembly, the country’s 2018 budget under the theme “Accelerating fiscal fitness for sustained inclusive growth, without leaving anyone behind”. The budget totaled 71.6 billion Zambian Kwacha (USD 7.46 billion at ZMW 9.6/USD, Weekly Bank of Zambia average for the week ending 29th September 2017) budget, of which 68.5 percent would be financed from local resources, is for the period 1st January to 31st December 2018.
The budget has been aligned with the recently launched Seventh National Development Plan (7NDP) and in this regard focuses on key strategic areas as identified in the said plan. These include economic diversification; job creation; poverty and vulnerability reduction; reducing development inequalities; enhancing human development; and creating a conducive governance environment for a diversified and inclusive economy. In order to support the effective implementation of the 7NDP, the Minister of Finance announced continuation of the implementation of policy and structural reforms as outlined in the Economic Stabilization and Growth Programme (ESGP).
In his address, the Honourable Mutati indicated that government’s objectives in 2018 were to achieve real Gross Domestic Product (GDP) growth of at least 5 percent, maintain single digit inflation in the range of 6.0 to 8.0 percent and to maintain international reserves of at least three (3) months import cover. This would build on the performance of about 4.0 percent expected to be achieved in 2017 and 3.8 percent achieved in 2016, outpacing the Sub-Sahara African economic growth of 2.7 percent.
A number of measures have been included in the 2018 budget that are aimed at supporting the social and economic development of the country. On the business front, the Minister announced several measures that are aimed at supporting business growth and diversification. These include the removal of duty on inputs used in the manufacture of animal feed, reduction of duty on bricks used in the formation of furnaces from 15 percent to 5 percent, exemption of unprocessed and semi-processed from Value Added Tax (VAT) and extending the number of imported products that would attract the surtax that was introduced in 2017. The Minister further stated that government would continue with its infrastructure development drive to improve connectivity and thereby reduce the cost of doing business.
On the whole, according to the Zambia Institute for Policy Analysis and Research (ZIPAR), the 2018 Budget has charted a course for accelerating fiscal fitness and putting Zambian back on the path of robust sustained and inclusive growth and development that leaves no one behind.
For an overview of the Tax changes in the 2018 Budget click the link below