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‘Improve fiscal discipline’

By BUUMBA CHIMBULU
GOVERNMENT needs to improve its fiscal discipline for the second quarter of this year as it projected to be more challenging with reduced revenue collection.
It is expected that Government’s fiscal position will worsen in the wake of covid-19, says Public Financial Management Consult, Senior Economist Bright Chizonde.
“This notwithstanding, the negative impact on revenue during the first quarter of 2020 were minimized because a greater portion of the economy was still operational.
“Government only experienced a decline in Value Added Tax (VAT) while other tax instruments remained resilient,” Mr Chizonde said in a statement yesterday.
On the expenditure side, he said, debt servicing and resource requirements to combat COVID-19 were yet to increase.
Mr Chizonde said that the depreciation of the Kwacha, was only pronounced towards the end of the first quarter.
Government, he said, should therefore take urgent steps to safeguard the fiscus in the second quarter since revenues were expected to reduce further while the exchange rate risk remains escalated.
“In order to create fiscal space for combating COVID-19, Government should urgently put some construction projects on hold, further improve its operations and seek for further external assistance,” he said.
Mr Chizonde, however, acknowledged that the 2020 budget performance for the first quarter of this year performed better than anticipated.
He said the budget performance for the first quarter of 2020 was better than anticipated given the projected negative impact of covid-19 on both revenue collection and expenditure requirements.
Revenues, grants and domestic financing totalled K18.1 billion and were above target by less than a percentage, with the majority of the tax instruments being above target except for VAT.
On the expenditure size, government spent K17.4 billion, with non-discretionary expenditure accounting for more than 90 percent.

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