During a budget speech for the year 2016 on September 9th, 2015 Zambia’s Finance Minister Alexander Chikwanda, explained that the country will experience a 20% jump in revenue next year to ZMW 42.1 billion in 2016 driven by better value-added tax collections.
With this increase in Zambia’s revenue, the country expects to cut the budget deficit from the current expected of 6.9% by the end of 2015, to 3.8% in 2016 despite falling copper prices and a power shortage that curbed mining output in the recent months, reported Bloomberg.
The budget deficit’s target would be reached even though the country decided to boost expenditure from ZMW 46.7 billion projected in 2015 to ZMW 53.1 billion in 2016 for mostly infrastructure projects, explained Minister Chikwanda.
According to Bloomberg, the raise in expenditure will be supported by a raise on foreign borrowing to ZMW 7.97 billion in the year 2016 up from around ZMW 4 billion in 2015, while domestic borrowing will be cut ZMW 2.5 billion representing only 4.7% of the budget.
These actions would conduct the country to an economic growth rebound to 5.0% from 4.3% projected by the International Monetary Fund (IMF) in 2015, explained Chikwanda.
The rebound would be supported by the power generation industry due to a proposal to reduce taxes for electricity generating equipment, reported Bloomberg.