2018 Budget.Pdf

Republic of Zambia

2018 BUDGET ADDRESS

By the Minister of Finance Hon. Felix C. Mutati, MP

“Accelerating fiscal fitness for sustained inclusive growth, without leaving anyone behind”

2018 Budget Address by Honourable Felix C. Mutati, MP Minister of Finance Delivered to the National Assembly on Friday, 29th September, 2017

1. Mr. Speaker, I beg to move Further, I wish to applaud the that the House do now resolve into church, media, private sector, civil Committee of Supply on the society organisations and Estimates of Revenue and cooperating partners for their Expenditure for the year 1st support in our development January, 2018 to 31st December, endeavours. 2018, presented to the National 4. Sir, during the official Assembly on Friday, 29th opening of the second session of September, 2017. the twelfth National Assembly, 2. Sir, I am a bearer of a message His Excellency, Mr. Edgar Chagwa from His Excellency, Mr. Edgar Lungu, President of the Republic Chagwa Lungu, President of the of Zambia reminded the nation of Republic of Zambia the need to uphold our national recommending favourable values and principles, which are consideration of the motion that I centred on patriotism and love for now lay on the Table. one another as enshrined in our national anthem ‘’one land and 3. Mr. Speaker, this is my one nation is our cry’’. I wish to second address since I was reiterate the President’s call, as it is granted this rare and momentous critical if we are to effectively task to serve as Minister of implement our development Finance. The walk has not been agenda and meet our aspirations easy, but collectively we have as a nation, without leaving made notable successes as I will anyone behind. highlight in my address. I once again wish to thank His 5. Mr. Speaker, the people of Excellency, Mr. Edgar Chagwa Zambia deserve peace and Lungu, President of the Republic stability, decent employment, of Zambia for giving me this quality public services and a opportunity. I also thank my conducive environment where Cabinet colleagues, all members of they can thrive, create their own this august House and the wealth and prosper. Achieving Zambian people for their support. these outcomes is the task with

2 which the Zambian people have started showing positive results in entrusted us. securing a sustainable growth going forward. Through these 6. Sir, this we shall attain measures Government through the diligent pursuit of the significantly reduced the strategic objectives contained in accumulation of arrears. As a the recently launched Seventh result of the reforms, Zambia’s National Development Plan. We credit rating outlook and investor aspire to make a reality of the confidence have improved. Plan’s theme of “accelerating Government is mindful that development efforts towards the despite this positive outlook, the Vision 2030, without leaving measures in the short term have anyone behind”. not yet favourably impacted on 7. Mr. Speaker, during the nine the welfare of the people. The long months of implementing the term benefits will be inclusive Economic Stabilisation and growth and prosperity. Growth Programme, dubbed 9. Mr. Speaker, by working “Zambia Plus”, a lot has been collectively, we can ensure that achieved. The Patriotic Front our goals and priorities are clearly Government is cognisant of the defined. Our resolve for inclusive fact that our people deserve much development remains more. We have made strides, yet unwavering. Our actions remain challenges still remain. Youth fiscally prudent. It is in this context unemployment and poverty levels that the theme of the 2018 Budget remain high. To this end, is “Accelerating fiscal fitness for Government is resolved to work sustained inclusive growth, tenaciously to uplift the wellbeing without leaving anyone behind.” of our people and enhance their meaningful participation in the 10. Sir, my address to this economy. august House is in four parts. In Part One, I review the 8. Sir, inclusive growth is only performance of the global and possible if we are steadfast in domestic economies during 2017 collectively implementing bold and present the outlook for the rest policy decisions and reforms. This of the year. Part Two, outlines the year, Government implemented macroeconomic objectives, austerity measures that have policies and strategies for 2018. In

Part Three, I present the details of compared with an average of US$ the 2018 budget and in Part Four, I 4,868 per tonne in 2016. Similarly, conclude. international crude oil prices are expected to surge upwards to an PART I average of US$49.0 per barrel in GLOBAL AND DOMESTIC 2017 from an average of US $42.8 per barrel in 2016. ECONOMIC DEVELOPMENTS IN 2017 14. Sir, the Zambian economy in 2017 has continued to rebound. 11. Mr. Speaker, the global Growth is expected to be above 4.0 economy is projected to grow by percent from 3.8 percent in 2016. 3.5 percent in 2017, compared to Key drivers will be the mining, 3.2 percent in 2016. This is mainly agriculture and manufacturing premised on a projected 4.6 sectors supported by improved percent growth in the large electricity generation. It is worth emerging and developing noting that the Zambian economy economies, driven by the gradual has outpaced the Sub-Sahara improvement in commodity African economic growth of 2.7 prices. percent. This is a reflection of the 12. Sir, growth in advanced sound economic policies that this economies is expected to Government has put in place. strengthen to 2.0 percent in 2017 15. Mr. Speaker, I now outline in from 1.7 percent in 2016. Sub- detail, the developments in the Sahara African growth is projected domestic economy. to expand to 2.7 percent in 2017 from 1.3 percent in 2016, driven by Real Sector increased agricultural and mining output. 16. Sir, crop production during the 2016/2017 farming season was 13. Mr. Speaker, as global favourable with significant economic activity gains increases in the output of maize, momentum, commodity prices are Irish-potatoes, rice, tobacco, expected to continue groundnuts and soya beans. strengthening in 2017. Copper prices are projected to average 17. Mr. Speaker, growth in the US$5,827 per tonne in 2017 fisheries sub-sector strengthened for both capture and aquaculture

4 fisheries to 77,029 metric tonnes exceed the 2016 output of 770,000 for the period January to June 2017 metric tonnes. from 56,241 metric tonnes in the 21. same period in 2016. This was Mr. Speaker, following the explained by higher participation initiative to modernise Harry by commercial and emergent fish Mwanga Nkumbula International farmers in aquaculture, and Airport, tourist arrivals at the enhanced enforcement of fisheries airport increased by 23.6 percent regulation in capture fisheries. in the first half of 2017 compared with the same period in 2016. We 18. Sir, in the livestock sub- anticipate similar trends at Ndola sector, there was an increase in the and Lusaka once the livestock population to 4.9 million modernisation projects have been during the period January to June completed. 2017 from 4.3 million compared to External Sector Performance the same period in 2016. This was due to the stocking and re- 22. Sir, the performance of the stocking programmes and external sector has improved improved animal disease control relative to 2016. Zambia’s trade programmes. balance recorded a surplus of US$388.3 million during the first 19. Mr. Speaker, on account of six months of 2017 compared with improved water levels, electricity a surplus of US$45.8 million generation in the first eight during the corresponding period months of 2017 increased by 23.7 in 2016. This was mainly driven by percent to 9.4 million megawatt higher export earnings relative to hours from 7.6 million megawatt imports. Total export earnings hours during the corresponding were 25.8 percent higher at US$3.9 period in 2016. This has billion compared with US$ 3.1 significantly reduced load billion in the corresponding shedding creating better prospects period in 2016. for industrialisation. 23. Mr. Speaker, copper export 20. Sir, as at end August 2017, earnings were higher by 38.1 copper production stood at percent at US$ 2.9 billion from US$ 510,369 metric tonnes, with the 2.1 billion in the corresponding end year production expected to period in 2016. This was due to a

5 rise in both export volumes and remained satisfactory as at end- prices. Non-traditional exports, August 2017. The banking sector however, marginally declined to also maintained a strong capital US$ 811.7 million during the first adequacy position and satisfactory six months of 2017 from US$ 835.5 earnings performance. million during the same period in 26. 2016. Sir, despite the easing of monetary policy, commercial bank 24. Sir, Gross international average lending rates only fell reserves as at end-August 2017 marginally to 26.6 percent in were estimated at US $2.3 billion, August 2017 from 29.4 percent in relatively unchanged from the December 2016. Private sector end-2016 level. This translates into credit remained subdued, 3.2 months of import cover. contracting by 2.9 percent as at end August 2017. Asset quality Monetary and Financial also deteriorated as reflected by Performance increased non-performing loans to 25. Mr. Speaker, monetary 12.2 percent relative to total loans, performance in 2017 has been compared to 9.7 percent as at end- positive. The exchange rate of the December 2016. This is above the Kwacha against major tradable internationally acceptable currencies has been relatively threshold of 10 percent. However, stable appreciating by measures are being taken to approximately 4.0 percent to date. reverse this trend and restore asset Inflation has fallen significantly to quality in the banking sector. 6.6 percent in September 2017 27. Mr. Speaker, Government from 18.9 percent during the same has successfully restructured the period in 2016. The Bank of Intermarket Banking Cooperation Zambia eased monetary policy that closed last year. I am glad to significantly in 2017. The policy inform the House that the rate was reduced from 15.5 shareholder agreement for the percent in January to 11 percent in new restructured bank has been August 2017. Statutory reserve concluded and the capital ratios reduced from 18 percent to requirement has been met. The 9.5 percent over the same period. new bank will operate under the The overall performance and name of Zambia Industrial condition of the financial sector

Commercial Bank and will take stance, expenditures are projected over the assets of Intermarket to be below target by 6.0 percent. Banking Cooperation. Consequently, the deficit on cash Management for the restructured basis is expected to close the year bank has been appointed and it at 6.8 percent of GDP. will soon commence operation. Debt and Arrears Position 28. Sir, following the successful restructuring of Intermarket Bank, 30. Sir, the stock of Government is now repositioning Government’s external debt as at the National Savings and Credit end-August 2017 was US $7.56 Bank and Development Bank of billion representing 29 percent of Zambia to improve their GDP. The stock of domestic debt governance structure and their in the form of Government capability in contributing to the securities was K44.6 billion, development of the banking sector representing 18 percent of GDP. and the economy. The Total public debt (external and repositioning will include the domestic) at end-August 2017 was restructuring of the National therefore, K114.9 billion, Saving and Credit Bank into a full- equivalent to US $12.45 billion and fledged commercial bank with representing 47 percent of GDP. I private equity participation. will subsequently outline the Fiscal Performance measures we are undertaking to comprehensively deal with the 29. Mr. Speaker, execution of the issue of debt. budget in 2017 remained challenging. Revenues and grants 31. Mr. Speaker, the stock of are projected to be below target by domestic arrears as at end June 7.0 percent at K42.1 billion by the 2017 was K13.2 billion, from K19.1 close of 2017. This will be on billion in December 2016. The account of delayed and non- significant reduction in arrears is implementation of some measures attributed to Government’s such as the use of fiscal devices, concerted effort to clear arrears. low compliance in some tax types and the non-disbursement of grants from cooperating partners. In line with the fiscal consolidation

PART II viii) reduce the stock of arrears and curtail the accumulation MACROECONOMIC of new arrears; and OBJECTIVES, POLICIES ix) Slow down the contraction of AND STRATEGIES FOR 2018 new debt to ensure debt 32. Sir, accelerating fiscal fitness sustainability. is critical for sustained inclusive Key Integrated Multi- Sectoral growth, diversification and job Policies and Interventions creation. These outcomes are in conformity with the strategic 33. Mr. Speaker, the Seventh objectives of the Seventh National National Development Plan has Development Plan. In this regard, adopted an integrated multi- the macroeconomic objectives and sectoral approach to development. policies for 2018 will be to: This entails that sectors have to i) achieve real GDP growth of work together in clusters to at least 5.0 percent; achieve the objectives of the Plan. ii) maintain single digit In this vein, the policy and inflation in the range of 6.0 to structural interventions to be 8.0 percent; undertaken in 2018 will be aligned iii) maintain international to the following five pillars of the reserves of at least 3 months Plan: of import cover; i) economic diversification and iv) attain domestic revenue job creation; mobilisation of at least 17.7 ii) poverty and vulnerability percent of GDP; reduction; v) limit the fiscal deficit, on a iii) reducing development cash basis, to 6.1 percent of inequalities; GDP; iv) enhancing human vi) limit domestic financing to development; and no more than 4.0 percent of v) Creating a conducive GDP; governance environment for vii) accelerate implementation of a diversified and inclusive measures towards economy. diversification of the economy; 34. Sir, there is need to create a supportive environment for

8 effective implementation of the introduction and development of Plan. This will be done by creating a farm block model of which three a stable macroeconomic will come on board in 2018. These environment and fiscal space, are in Copperbelt, Muchinga and while consolidating policy and Northern provinces. This model is structural reforms as outlined in anchored on a core venture, agro the Economic Stabilisation and processing facilities and Growth Programme. smallholder farmers. This will further allow smallholder and 35. Mr. Speaker, I now outline emergent farmers to benefit from policies under each of the five technology transfer and have pillars of the Plan. access to ready markets. In PILLAR ONE: ECONOMIC addition, Government is DIVERSIFICATION AND JOB facilitating a US$100 million CREATION public private sector investment into a tractor and agricultural 36. Sir, the continued reliance on equipment assembly plant in the the mining sector has exposed the Lusaka South Multi-Facility economy to volatility arising from Economic Zone. The plant will be external shocks. Further, owing to operational by end of 2018. the high mechanisation, the Further, Government has obtained mining sector’s ability to absorb financing of US$40 million from the large number of youth EXIM Bank of India that will be entering the labour market each used for agriculture year is limited. There is, therefore, mechanisation. need to diversify the economy to labour intensive sectors such as 38. Sir, to maintain the agriculture and tourism. diversification drive, Government during the 2017/18 farming Agriculture, livestock and fisheries season will fully migrate to the e- voucher system to cover one 37. Mr. Speaker, in transforming million beneficiaries. Government agriculture, diversification has further put in place a new remains key. Government will framework to eliminate ghost implement measures aimed at farmers and the duplication of raising farmer productivity as well beneficiaries. As a result of the as realising diversification within cleanup, a total of 600,000 the sector. One such measure is the

9 undeserving beneficiaries were Kariba, Tanganyika and removed, resulting in a saving of Bangweulu as well as along Kafue K1.0 billion. River at Kasaka and in water bodies in Western province. This is 39. Mr. Speaker, in the 2017 in an effort to improve Budget, I announced that productivity and production to Government would construct 18 attain self-sufficiency. artificial insemination centres to improve livestock production and 43. Mr. Speaker, Government breeds. I am happy to inform this will continue with the august House that 10 centres have implementation of the US$50 since been completed and are million Zambia Aquaculture operational. The remaining 8 are at Enterprise Development Project in various stages of development. 2018. This is aimed at, among others, building institutional 40. Sir, in the area of animal capacity for fish, fingerling and health, Government will continue feed production. Further, this will with animal disease prevention provide support to the private and control programmes across sector in developing the the country. To this effect work on aquaculture value chain including 200 dip tanks will continue. In establishing fish feed plants, addition, construction of 4 hatcheries, and freezing and regional laboratories will be processing facilities. completed by the end of 2018. 44. Sir, in the fisheries and 41. Mr. Speaker, given the rising livestock sub-sector, Government market potential for livestock, is also currently undertaking a especially goat and sheep, comprehensive livestock and Government will facilitate access aquaculture census which will be to both local and foreign markets finalised in 2018. The results of the for livestock products. One such census will guide policy initiative is the exportation of one formulation to facilitate growth million goats per annum to the and development. Middle East. 45. Mr. Speaker, in addition to 42. Sir, with regards to fisheries, the foregoing measures, Government in 2018 will promote Government will enhance cage fish farming on lakes Mweru, extension service provision. In

10 partnership with the private challenges affecting their sector, Government will work operations. towards improving agriculture 48. market information systems and Sir, in the 2017 budget, I the development of functional announced that Government markets. This is essential for working with private sector would sustained higher production, set up the Agricultural and enhancement of agriculture value Industrial Credit Guarantee chains, raising of farmer incomes Scheme. I am happy to report that and reduction of poverty. this has been done. The scheme will facilitate access to affordable 46. Sir, to support the outlined credit to Small and Medium measures, Government will Enterprises. Further, Government recruit 750 extension service will engage financial institutions workers for agriculture, fisheries to increase credit to Small and and livestock. Medium Enterprises using movable assets as collateral in line Industrialisation with the provisions of the Movable 47. Mr. Speaker, Assets Act. In addition to further industrialisation is key to the enhance access to finance for Small promotion of value addition and and Medium Enterprises, the attainment of Government’s Government will include the use economic diversification agenda. of securities and stocks as In order to facilitate expansion of collateral. the country’s industrial base, the Tourism development of multi-facility economic zones and industrial 49. Mr. Speaker, in order to parks will continue. In this regard, reduce the cost of doing business the process of setting up the Kafue and unnecessary bureaucracies in Iron and Steel, Kalumbila and the Tourism Sector, Government Chembe multi-facility economic will together with the Business zones is underway. To enhance the Regulatory Review Agency operations of the existing zones establish and operationalize a and parks, Government will in Single Licensing System. 2018 review their performance so as to identify and address 50. Sir, with regards to infrastructure development, the

Government will through an will continue to support artisanal integrated approach, prioritise and small scale miners through the major roads, bridges and air strips Development Mineral Capacity leading to tourism destinations. Building Programme. Further, Further, Government will promotion of downstream value facilitate development of requisite chains will be emphasised. infrastructure to ease access to Energy tourist sites, rehabilitate heritage sites and strengthen wildlife 53. Mr. Speaker, stable and protection. reliable energy supply is critical to Mining uplifting the welfare of our people and productivity of business. 51. Mr. Speaker, policy Priority in the electricity sub- consistency is critical to create and sector will be placed on increasing sustain investor confidence. the energy mix through promotion Government is committed to of off-grid electricity generation ensuring that this continues. The and alternative energy sources. In focus in the mining sector in 2018 this regard, Government will will be on broadening the tax base continue with on-going reforms in and enhancement of mineral the sector to boost private sector production to include non- participation. traditional minerals, such as 54. gemstones and industrial minerals Sir, Government in 2018 will among others. Government will bring to this august House the also strengthen the regulatory Energy Regulation Bill and the framework and enforcement in the Electricity Bill for enactment. The sector to curb avoidance in Energy Regulation Bill will allow payment of taxes and levies. for enhanced supervision and regulation of the energy sector, 52. Sir, to enhance information while the Electricity Bill will, provision and planning, among other things, allow for Government will in 2018, continue participation of other players in with the geological mapping the industry. programme for the remaining 40 55. percent of the country. In addition, Mr. Speaker, to ensure cost to promote inclusiveness within reflectivity in tariffs and the mining sector, Government encourage investment in the

12 sector, Government in 2018 will of the 2,400 megawatts Batoka finalize the cost of service study. Hydro Power Project. In addition, The results will provide the basis Government has continued to for future adjustments to work on linking Zambia to the electricity tariffs. Southern and East African region through the Zambia-Tanzania- 56. Sir, to promote small and Kenya inter-connector project. medium private sector investment The project will enhance in renewable energy, Government electricity trade, improve power will implement the Renewable security, ensure reliability of Energy Feed-In Tariff Regulatory supply and foster regional Framework. The target is to add integration, connecting power 200 megawatts through this from Cape to Cairo. initiative in the first phase. I wish to inform this august House that 59. Mr. Speaker, in the 2017 financial closure on the scaling Budget address, Government solar project has been reached. indicated the intention to Construction will commence in disengage from direct October 2017 and will add 100 procurement of finished megawatts petroleum products by March, 2017. This is meant to remove the 57. Mr. Speaker, I am glad to burden of oil procurement from inform this House that the dam the Treasury, attain efficiencies construction of Kafue Gorge and promote private sector Lower power project is participation. This measure will progressing well. Further, work on take effect in the first quarter of the second phase of the 300 2018. megawatts Maamba thermal plant is expected to commence in 2018. Transport, Information and In addition, the 250 megawatts Technology Infrastructure Kalungwishi hydro power project will commence in 2018. 60. Sir, it is often said that development follows 58. Sir, Government, in infrastructure. Government in collaboration with the Republic of 2018 will continue with the Zimbabwe has commenced ongoing road infrastructure preliminary financing projects, including the Link arrangements for the development Zambia 8,000, the Lusaka 400 and

13 the Copperbelt 400 projects. To 63. Mr. Speaker, in my last reduce congestion in Lusaka, the budget address, I urged pension US$240 million Lusaka City funds to participate in financing Traffic Decongestion Project development projects. I am glad to financed by cooperating partners inform the House that NAPSA has is expected to commence in 2018. taken up the challenge to this call by investing in the rehabilitation 61. Mr. Speaker, the recently of the Chingola to Solwezi Road at launched Lusaka - Ndola dual a cost of K2.1 billion. Recovery of carriage way is one of the most the invested funds will be through critical economic roads. Let me revenue from toll gates to be hasten to mention that this project constructed on the road. I consists of two phases. Phase I will encourage other pension funds to be the construction of the dual take up the challenge to diversify carriage way, while phase II will their investment portfolio through involve the construction of such arrangements. auxiliary infrastructure which includes hotels, toll gates and 64. Sir, to further diversify service stations. Phase I will be sources of financing for financed through Public Private infrastructure development, Initiatives while phase II will be Government will in 2018 set up an financed through private sector Infrastructure Development Fund. participation. This will be financed through proceeds from the sale of 62. Sir, the National Road Government assets, pension fund Tolling programme has proved to participation and the sale of be successful in raising revenue infrastructure bonds. for road maintenance and rehabilitation. In the first eight 65. Mr. Speaker, in the railway months of 2017, Government has transport, Government will re- raised K490.5 million. This is a vitalise Zambia Railways Limited sustainable way of ensuring that and concession TAZARA. Further, our road network is well Government will through a Public maintained. In this regard, Private Partnership arrangement, Government will in 2018 continue commence the development of the to construct Toll gates across the Chipata-Petauke-Serenje railway country. line.

66. Sir, the expansion and 68. Sir, in order to achieve modernisation of the Kenneth universal access to communication Kaunda International Airport is services, Government is expected to be completed in 2018. implementing a programme to Further, Government has construct communication towers commenced construction of the across the country. Under the first Copperbelt International Airport. phase, Government has concluded the construction of 204 67. Mr. Speaker, to improve ICT communication towers. In 2018, infrastructure, Government will Government will commence the invest in, and upgrade construction of 1,009 towers under telecommunications networks, the second phase in unserved and data centres and access devices under-served areas. through the Smart Zambia Master Plan. This will improve the flow of 69. Mr. Speaker, interventions information within and among under Pillar One are aimed at Government institutions, creating a supportive environment enterprises and citizens to bring to stimulate economic about social and economic diversification and job creation as benefits. This is also aimed at enshrined in the Seventh National transforming Government’s mode Development Plan. of delivery of public services from 70. traditional face-to-face Sir, these interventions also interactions to online channels to underscore Government’s ensure that citizens and business commitment to create jobs for our entities can access services people. anywhere and anytime. The PILLAR TWO: REDUCING Government will also facilitate the POVERTY AND up-scaling of ICT skills for both VULNERABILITY public service and private sector workers. Government will also 71. Mr. Speaker, Government accelerate the mainstreaming of remains resolute to reducing ICT culture in the Zambian poverty and vulnerability among education curricula. This is to its citizens. ensure early adaptation and sustainability of ICT based 72. Sir, in 2018, Government will solutions. continue to implement policies,

15 programmes and initiatives aimed 134,000 targeted beneficiaries this at protecting and empowering year. This will enable vulnerable vulnerable members in our people to have access to education communities. To assist in and healthcare. planning, policy formulation and Food Security Pack eliminating duplications within the social protection programmes, 75. Mr. Speaker, in the Government is implementing the 2018/2019 farming season, electronic Single Registry of Government will increase the Beneficiaries for all social number of household beneficiaries protection programmes. This has under this programme to 80,000 been piloted in five districts and from 40,000 in the 2017/2018 will be rolled out to an additional farming season. The objective of 36 districts in 2018. the programme is to support Social Cash Transfer Scheme vulnerable but viable farmers. Home Grown School Feeding 73. Mr. Speaker, Government scaled-up the Social Cash Transfer Programme in 2017, by increasing coverage 76. Sir, the Home Grown School and monthly payments to each Feeding programme has proved beneficiary household. Further, effective in increasing school the number of beneficiary attendance and combating households were increased from malnutrition amongst the 242,000 in 2016 to 590,000 vulnerable pupils. I wish to report beneficiary households in 2017. In that by the end of June this year, 2018, the number of Social Cash over 956,000 children were on the Transfer beneficiaries will be programme in both Government further increased to 700,000. In and community schools. The focus addition, Government will fully in 2018 will be to increase the migrate to an electronic social cash number of learners on the transfer platform. program to 1.5 million from 1.2 Public Welfare Assistance Scheme million projected at end 2017.

74. Sir, in 2018, Government will increase support under this programme to 200,000 from the

Womens’ Development Western, Southern and Central Programme provinces. This intervention will also be extended to Northern, 77. Mr. Speaker, Government Muchinga and Luapula Provinces. will continue to implement the To address deforestation, Womens’ Development Government will undertake the Programme aimed at enhancing US$32.8 million Integrated access to productive resources and entrepreneurship skills for poor Forestry Landscape project in and vulnerable women. Under Eastern province with the support this programme about 30,000 of our cooperating partners. women will be empowered with Further, Government will productive grants and micro credit strengthen the national disaster countrywide in 2018. In addition, response system. Government with support from the World Bank is targeting to Pensions Reforms provide educational support to 79. Mr. Speaker, in my address to 16,000 girls from extremely poor this august House last year, I households in 16 districts and a indicated Government’s intention further 75,000 women with grants to review legislation to ensure a in 51 districts. pension system that is affordable, Climate Change and Disaster Risk sustainable and offers broader Reduction social security protection. I am happy to report that the Social 78. Sir, Zambia has not been Protection Bill has now been spared from the adverse effects of finalized. climate change which has the 80. Sir, among other things, the potential to reverse our proposed legislation will include developmental gains. In this the establishment of a unified regard, Government will pension system, a national social implement strategies to mitigate security agency, a national social and adapt to the adverse effects of security fund, and provide for climate change. Some of the basic social protection, including measures include the Pilot Project health and maternity insurance. It for Climate Change Resilience will also provide for the self- currently being implemented in

17 employed and other persons, to roads, communication and rural make contributions to the national electrification infrastructure. social security scheme. Feeder Roads 81. Mr. Speaker, these reforms 84. Mr. Speaker, Government is will be a fundamental paradigm committed to upgrading, shift from the existing system and rehabilitating and maintaining will help reduce destitution feeder roads to enhance the among our people. I therefore urge connectivity of rural areas to all Honourable Members of this markets. Government will august House to critically debate continue to work with cooperating and approve the Bill when it is partners in this area and has since presented to the House. secured US$200 million from the World Bank under the rural PILLAR THREE: REDUCING connectivity project. DEVELOPMENT INEQUALITIES Decentralisation

82. Mr. Speaker, Government is 85. Sir, centralisation of power concerned with developmental particularly in respect of resource inequalities that exist between control and decision making has rural and urban areas in terms of hampered the attainment of inadequate social service delivery, equitable national development. poor infrastructure and financial In order to address this, exclusion among others. Government will in 2018, ensure that finances required to provide 83. Sir, Government will in 2018 front-line public services and prioritise the increased access to infrastructure projects at social services and completion of provincial and district level are on-going education, health and deconcentrated to provincial water and sanitation administration. To ensure infrastructure in rural areas. In participation of the citizenry in order to attract investment in rural project identification, planning areas, Government will continue monitoring and evaluation, with the construction of economic Government will commence the infrastructure such as feeder devolution of powers from central government to lower level

18 structures. This will help remove Health bureaucracy and enhance timely delivery of services. 88. Mr. Speaker, health is key to enhancing productivity and the 86. Mr. Speaker, to deliver welfare of our people. In services, councils need to raise strengthening health systems, substantial revenue from property priority will be on completion of rates. However, procedural delays on-going construction of health caused by processes set out in the infrastructure, ensuring 1997 Rating Act have led to availability and timely supply of substantial revenue losses by drugs, procurement of medical councils. To address these equipment, recruitment of health challenges in 2018, the Rating Act personnel and promotion of will be repealed and replaced to innovative health financing. ensure that councils gain revenue buoyancy and adequacy from 89. Sir, in the 2017 budget property rates. This will go a long address, I informed the House, way in establishing a sound that the construction of 350 health financial base for local authorities, posts will be completed this year. in accordance with Article 151 of As at end of August, a total of 275 the Constitution. health posts were completed and are operational. Further, Matero PILLAR FOUR: ENHANCING and Chilenje clinics have been HUMAN DEVELOPMENT upgraded to first level hospitals while 35 district hospitals are at 87. Sir, human development various stages of construction. plays a critical role in promoting Other projects which include inclusive growth and laying a modernization and upgrading of foundation for future prosperity. various hospitals are still The Seventh National underway. In order to increase Development Plan identifies three access to health services, key components of human Government will in 2018, continue development namely health, to construct and upgrade health education and skills development facilities across the country as well and improved access to water as procure modern equipment. supply and sanitation. 90. Mr. Speaker, Government will introduce measures to

19 strengthen local manufacturing of 94. Mr. Speaker, in order to drugs thereby assuring security of enhance health service delivery, supply of drugs. This will also Government will in 2018, focus on create employment opportunities prevention, control and treatment for our people and conserve of communicable and non- foreign exchange. communicable diseases. Government will also focus on 91. Sir, in order to ensure timely reproductive, maternal, neonatal, and adequate availability of child health, adolescent health, essential medicines and medical nutrition and health promotion. supplies, Government will Further, Government will establish an additional regional introduce e-services in health hub in Ndola this year. In 2018, institutions starting with the Government will establish two University Teaching Hospital. more hubs in Mansa and Mpika and a sub-hub in Kabompo. Education and Skills Development Further, Government has also put in place prefabricated storage 95. Sir, education and skills facilities at district level to increase development is vital to ensure a storage capacity and ease drug high quality labour force that is accessibility. necessary to foster development. In this regard, the focus of 92. Mr. Speaker, human resource Government is to ensure increased for health remains a critical access to quality education at all component in the provision of levels. This will be achieved by quality health services to the focusing on construction and Zambian people. In 2018, rehabilitation of education Government will recruit 1,000 facilities at all levels, provision of health personnel to add to the equipment and learning materials, 7,400 recruited this year. recruitment of teachers and creating sustainable financing 93. Sir, Government in 2018 will mechanisms for higher learning establish a Social Health Insurance institutions. As part of the long Scheme to increase the resource term financing solution for envelop and enhance universal Technical Education, Vocational health coverage. The Social Health and Entrepreneurship Training Insurance Bill will be tabled before (TEVET), Government this year, this august House.

20 established a Skills Development construction of universities, and Fund. As at end of August 2017, a university colleges specialized in total of K105.4 million was raised the fields of science, technology, through the skills development mathematics and performing arts. levy. Further, Government is committed to construction of on- 96. Mr. Speaker, in 2018 the focus going infrastructure and in the primary education sub- equipping of TEVET institutions. sector will be to continue increasing access to, and Water Supply and Sanitation improving quality of primary education. Infrastructure 99. Sir, in my last budget development in the primary address, I allocated a total of education sub-sector will focus on K391.7 million for water supply completion of schools under and sanitation programmes construction and rehabilitation of throughout the country. I am classrooms. With regard to happy to report to this august secondary education, Government House that this investment has will focus on the implementation resulted in the drilling of 1,340 of the two-tier system which offers boreholes and construction of 10 learners the opportunity to follow small water schemes in rural areas. an academic or vocational career A further 600 boreholes have been path way. rehabilitated. This investment will support the provision of safe and 97. Sir, at tertiary education clean water to 600,000 households level, in 2017 Government in rural areas. committed to work towards the operationalization of the Higher 100. Mr. Speaker, water and Education Loans and Scholarships sanitation infrastructure are being Scheme. I am pleased to inform constructed and upgraded in this august House that urban and peri-urban areas. Key is Government has established the the Kafue Bulk Water Supply Higher Education Loans and Improvement Project under the Scholarship Board to oversee the Millennium Challenge Account operations of the Scheme. aimed at increasing water supply to 110 million litres of water per 98. Mr. Speaker, Government in day to Lusaka and surrounding 2018 will continue with the areas.

101. Sir, in 2018 focus will also be debt management and in the on unbundling the arrears owed to monetary and financial sector. the contractors and suppliers, in Fiscal Policy order to complete the ongoing water supply and sanitation 103. Sir, during 2017, Government projects. Investment in the water commenced the implementation supply and sanitation sectors will of measures aimed at restoring only yield tangible results if fiscal fitness in order to attain accompanied by supportive policy inclusive growth and and legislative reforms. In this development under the Economic regard, Government will bring to Stabilisation and Growth this House amendments to the Programme. Accordingly, Water Supply and Sanitation Act Government will continue to no. 28 of 1997 in order to implement these measures in 2018 strengthen legislation aimed at restoring budget surrounding the provision of credibility, transparency and water and sanitation services in policy consistency while scaling- the country. up social protection. Government PILLAR FIVE: CREATING A will also ensure that the CONDUCIVE GOVERNANCE allocations to the health and ENVIRONMENT FOR A education sectors, as a proportion DIVERSIFIED AND of the total budget, are protected. INCLUSIVE ECONOMY 104. Mr. Speaker, domestic Policy, Regulatory and Structural resource mobilisation will be Reforms enhanced and subsidies will gradually be reduced. These 102. Mr. Speaker, legal, policy, resources will be channelled to regulatory and structural reforms areas with higher socio-economic are critical in creating a conducive returns. governance environment that supports a diversified and 105. Sir, under the Economic inclusive economy. Government Stabilization and Growth will therefore continue its reform Programme, Government has agenda in fiscal, land undertaken to restore budget administration and management, credibility and stability. In doing so, enhanced domestic resource

22 mobilization will, therefore, be a iv) Limit the fiscal deficit in pillar to achieving this objective, order to ensure sustainability complemented by policies that of debt; and ensure that expenditure is v) Pursue project financing maintained within affordable through Public Private levels. Partnerships.

106. Mr. Speaker, the Government 108. Mr. Speaker, to support and in 2018 will, therefore, implement anchor fiscal prudence, measures that ensure that the tax Government will further carry out system is simpler and fairer in legal reforms that include: order to expand the tax base and i) Revisions to the Public increase compliance. This will be Finance Act to make it more through continued modernisation punitive to cases such as and automation of revenue abuse of and misapplication collection processes coupled with of funds; an upscale in tax payer education ii) Revisions to the Public and services. In addition, tax Procurement Act to ensure incentives will be rationalised, value for money and while audit functions will be introduce benchmarking of augmented to address base prices and requirements for erosion and profit shifting. project appraisal prior to 107. Sir, on the expenditure side, granting of tender approvals; the measures will: iii) Enactment of the Planning and Budgeting Bill that will

i) Concentrate resources in anchor budget and plan areas that facilitate economic preparation in law and diversification, including on- enhance participation by going projects so as to realize citizens including by value for money; Members of Parliament ; and

ii) Prioritise the dismantling of iv) Pension reforms including arrears; reforming public pension

iii) Control the growth in the funds, enacting the social wage bill by limiting protection bill. recruitments to critical sectors and undertaking a 109. Sir, to maximize national cleanup of the payroll; benefits from our mineral assets,

Government has been budget to Output Based Budgeting. implementing the Mineral Value In 2018, the Ministry of Chain Project. This is intended to Community Development and foster mutual accountability and Social Services will join the two transparency in the management of education ministries in having our mineral resources. I am pleased Output Based Budgets. For the to report that nine of the major 2019 Budget the Output Based mines have now been migrated to Budget will be rolled out to all reporting their production figures Ministries, Provinces and Other on a full time basis on the electronic Spending Agencies. system. Also, two laboratories for Land Administration and assaying mineral quality will soon be fully operational. Management

110. Mr. Speaker, in April, 2017 112. Mr. Speaker, access to land is Government announced a three critical to the achievement of our months amnesty on interest and economic diversification agenda, penalties for taxpayers who had the reduction in poverty and outstanding tax liabilities with the vulnerability as well reducing Zambia Revenue Authority. Owing inequalities among our citizens. I to the overwhelming response of indicated in my 2017 budget 1.3 million applications from address that Government would taxpayers, Government extended commence the land titling the amnesty to 15th September, programme, starting with pilot 2017. Sir, the Government greatly sites in Lusaka. I am glad to report values all taxpayers. As such, we that the pilot has since been will continue to support those concluded. under the amnesty who wish to 113. Sir, Government in 2018 will restructure their Time to Pay therefore, roll out the national land Agreements within the allowable titling pilot programme with the period. aim of issuing title for at least 111. Sir, to enhance performance 300,000 parcels of land. The tilting orientation of the budget and align programme will significantly it to the development outcomes in contribute to the generation of the Seventh National Development Government revenues. Plan, Government is migrating the

Debt Management Policy stock of arrears. Under the strategy, the Government will also continue 114. Mr. Speaker, Government to utilize Public Private undertook a deliberate and Partnerships and joint ventures to ambitious infrastructure finance projects and reduce the development programme in order burden on the Treasury. to address the binding constraints to growth caused by the poor state 117. Sir, as part of transparency of economic infrastructure. The and good governance that is the objective was to create a platform cornerstone of this Government, I for sustainable and inclusive will, during this session of growth. Parliament, present a bill to repeal the Loans and Guarantees 115. Sir, the financing of this (Authorisation) Act. The Bill I will ambitious programme has entailed present will provide for enhanced accumulation of debt. However, oversight over the borrowing Government is cognisant of the fact activities of the Government by that the risk on our debt portfolio having the National Assembly has heightened, worsened by the approve loans before they are economic imbalances faced in 2015 contracted. This is in line with the and 2016 when economic growth provisions of the Constitution. was subdued. Asset Management – State Owned 116. Mr. Speaker, to address these Enterprises concerns, the Government has published the Medium Term Debt 118. Mr. Speaker, Government Management Strategy that seeks to will put in place a robust asset return the debt to low risk of debt management system for all State- distress. The strategy outlines Owned Enterprises to assess their measures to drastically reduce the viability and sustainability. A rate of debt accumulation, attain a comprehensive monitoring and cheaper and longer debt maturity evaluation framework will be profile. In addition, future developed to ascertain compliance borrowing will be undertaken of State Owned Enterprises to strictly within sustainable levels. corporate governance and The strategy also defines measures operational efficiency. This will towards the refinancing of the three ensure that State Owned Eurobonds and dismantling of the Enterprises contribute to domestic

revenues, employment creation 121. Sir, the Bank of Zambia will and economic growth. continue to enhance the forward- looking monetary policy Capital Markets framework anchored on the Policy 119. Sir, capital markets in Rate as the key signal for the Zambia have remained highly monetary policy stance. This is underdeveloped and intended to improve the underutilized. The high cost of transmission of price signals and financing in the banking sector reduce reliance on non-price tools makes the case for development of in the conduct of monetary policy. capital markets as a cheaper source 122. Mr. Speaker, the Government for raising longer term funds by the remains steadfast in its private sector and State Owned commitments to financial sector Enterprises that require stability. The Financial Sector capitalisation. The Government is Assessment Programme therefore working to address this. undertaken in mid-2016 identified Monetary and Financial Sector a number of vulnerabilities, risks and reforms needed to support Policies financial stability and financial 120. Mr. Speaker, monetary policy development and inclusion. will remain focused on Largely, the required reforms were maintaining price stability and will to review and update various continue to utilise market-based pieces of legislation that involve instruments in line with the regulation and supervision of the medium term target range of 6 to 8 financial sector, modernization of percent. In the foreign exchange the payments system and market, the Bank of Zambia will protection of depositors. The Bank continue to pursue a flexible of Zambia is strengthening its exchange rate regime and supervisory capacity and interventions in the foreign enhancing its collaboration with exchange market will be limited to the Securities and Exchange smoothing volatility in the Commission and the Pensions exchange rate and building Insurance Authority as regulators international reserves. of the financial sector.

123. Sir, Government is also implement the National Financial reviewing the Bank of Zambia Act, Inclusion Strategy. The overall and the National Payment Systems objective of the strategy is to Act. Further, work is on-going to increase access and usage of a draft a depositor protection bill. broad range of quality and These pieces of legislation will be affordable financial services. This is brought to this House in due important in promoting the course. Other pieces of legislation participation of the marginalized that support the financial sector, population in rural and peri-urban such as the Insolvency Bill will also areas in the business and economic be reviewed and updated. affairs of the country. The target is to increase financial inclusion from 124. Mr. Speaker, with respect to the current 59 percent to 80 percent insurance, the Government will by 2022. This will be done by using repeal and replace the Insurance information and communication Act to strengthen governance and technology platforms, among financial soundness. The Bill also others. seeks to implement micro insurance and require citizens to Public Investment Management insure locally, serve for re- Reforms insurance 127. Sir, the Government has in 125. Sir, Government is finalizing recent years increased investment the development of the financial in public infrastructure to facilitate sector development policy. Its economic development and service overall objective is to have a well- delivery. To strengthen developed, competitive and coordination in the preparation inclusive financial system that and implementation of public supports efficient resource investment projects, Government mobilisation and access to financial will establish a public investment services and products by all. The management system. This system policy will promote financial will provide standardised stability, financial inclusion and procedures and guidelines in the deposit protection, among others. identification, preparation, appraisal and implementation of 126. Mr. Speaker, to accelerate public investment projects to financial inclusion, Government ensure efficiency and attainment of will over the next five years

value for money. In this regard, resource mobilization, improving Government will in 2018, establish economic and fiscal governance, a Feasibility Study Fund to ensuring economic stability, facilitate undertaking of feasibility growth and job creation and studies for major public investment protecting the vulnerable through projects before being considered scaling up of social protection for financing in the budget. programmes. Significant progress has been in the implementation of External Sector Policy these measures.

128. Mr. Speaker, Government 130. Mr. Speaker, in policy in the external sector will implementing these measures, remain anchored on the Government saw the need to maintenance of an open economy collaborate with both external and with a competitive and market- internal partners. Key among the driven foreign exchange rate. The external partners in this process is focus will be on promoting a the International Monetary Fund. diversified export base to increase In so doing we have been engaged exports, increasing foreign direct in intense discussions with the IMF investment inflows, and maintain based on the programmes and international reserves to at least 3 targets we set for ourselves under months of import cover. the Economic Stabilization and IMF Programme Growth Programme. A lot of progress has thus far been made 129. Sir, Government’s response with key structural and regulatory to the economic challenges that reforms implemented. Based on the faced the nation in the second half spending plans presented in the of 2015 and most of 2016 had to be Medium term Expenditure confronted with bold reforms and Framework (MTEF) and the measures. The measures outlined Budget I am presenting today, in our Economic Stabilization and Government will continue to Growth Programme were based on engage the Fund in October 2017 to domestic solutions. The Economic set an agreeable macroeconomic Stabilization and Growth framework that takes into account Programme provides measures for our spending and financing plans restoring budget credibility and over the MTEF period and sustainability, enhancing domestic

provides a platform to conclude an K20.1 billion or 28.1 percent of the IMF Programme. budget will be financed through domestic and external borrowing. PART III 133. THE 2018 BUDGET Sir, in line with the Seventh National Development Plan, the 131. Sir, I now present the 2018 allocations in this budget are National Budget, which lays out targeted at addressing the five the various expenditure and strategic areas of economic revenue measures aimed at diversification and job creation, achieving Government policy poverty and vulnerability objectives. reduction, reducing developmental inequalities, enhancing human 132. Mr. Speaker, the Government development and creating a proposes to spend a total of K71.6 conducive governance billion in 2018 or 25.9 percent of environment for a diversified and GDP. Of this amount, K49.1 billion inclusive economy. or 68.5 percent of the total budget will be financed by domestic 134. Mr. Speaker, I now present revenues and K2.4 billion or 3.4 the 2018 budget by functions of percent by grants from various Co- Government. operating Partners. The balance of

2018 Expenditure by Function 2018 Budget Function Share of Amount (K) Budget General Public Services 25,898,031,580 36.1%

External Debt Payment 7,268,795,020 Domestic Debt Payment 6,972,268,260

Local Government Equalization Fund 1,078,428,000

Zambia Revenue Authority 848,664,000 Compensation and Awards 303,363,990

Public Affairs and Summit Meetings 235,305,460 Constituency Development Fund 218,400,000 Defence 3,498,217,240 4.9% Public Order and Safety 2,144,570,440 3.0%

National Identity Documents 37,249,430 Economic Affairs 17,258,329,480 24.1%

Roads Infrastructure 8,660,314,680

Farmer Input Support Programme (e-voucher) 1,785,000,000

Strategic Food Reserves 1,051,200,000

International Airports 940,500,000

Arrears for FISP & FRA 441,000,000 Rural Electrification Fund 251,331,670 Environmental Protection 951,352,080 1.3%

Climate Change Resilience 457,574,620 Housing and Community Amenities 816,262,640 1.1%

Water Supply and Sanitation 564,508,860 o/w Lusaka Sanitation Project (Millenium Challenge) 239,000,000 Markets and Bus Stations 17,822,620 Health 6,781,558,820 9.5%

Drugs and Medical Supplies 1,200,227,400

Health Infrastructure 274,580,400

Medical Equipment 51,561,610 Recreation, Culture and Religion 451,160,740 0.6% Education 11,561,643,204 16.1% School Infrastructure 740,060,456

Student Loans and Scholarships 557,000,000

University and College Infrastructure 321,865,420

Skills Development Fund 176,698,000 Social Protection 2,301,259,752 3.2%

Public Service Pension Fund 1,060,550,000

Social Cash Transfer 721,180,000 Food Security Pack 140,000,000 TOTAL 71,662,385,976 100.0%

General Public Services 136. Mr. Speaker, in our resolve to fiscally empower our Local 135. Sir, I propose to spend K25.9 Authorities and ensure equitable billion on General Public Services. distribution of resources, I have Significant outlays under this allocated K1.1 billion to the Local category include K7.3 billion and Government Equalisation Fund. K7.0 billion for external and This represents an increase of 21.5 domestic debt payments, percent from 2017 levels. respectively.

137. Sir, in the same vein, I have completed, these investments will allocated to the Constituency reposition Zambia into a regional Development Fund a total of air transport hub. K218.4 million to support projects 141. at the community level. Sir, to facilitate the provision of agricultural inputs to one Economic Affairs million beneficiaries, I have allocated K1.8 billion to the 138. Mr. Speaker, the Economic Farmer Input Support Affairs function plays a major role Programme, which will be in our quest to achieve a implemented through the e- diversified economy that delivers voucher system. I have also more jobs for our citizenry. allocated K1.1 billion to facilitate Accordingly, I propose to spend a maintenance of our country’s total of K17.3 billion or 24.1 strategic food reserves at 500,000 percent of the budget on the metric tonnes. Economic Affairs function. 142. Mr. Speaker, in order to 139. Sir, a significant allocation make rural areas attractive for under this function is K8.7 billion investment and promote rural for road infrastructure. This will industrialisation, Government include the continuation of the will continue with its Rural Link Zambia 8,000, the C400 and Electrification Programme to L400 projects. To complement ensure access to electricity for these efforts, the Government will rural areas. Accordingly, K251.3 further undertake significant million has been allocated for works to rehabilitate and upgrade rural electrification. feeder roads across the country Education and Skills Development through the Rural Roads Connectivity Programme. 143. Sir, I propose to spend K11.6 billion on education and skills 140. Mr. Speaker, in order to development. This will facilitate improve airport infrastructure in spending on, among others, the country, a total of K940.5 infrastructure development, million has been allocated for the student loans, teacher recruitment construction of the Kenneth and procurement of school Kaunda and Copperbelt requisites. International Airports. Once

Health Social Protection

144. Mr. Speaker, I propose to 147. Sir, to reduce vulnerability spend K6.8 billion on health. Of and inequalities among our this amount, K1.2 billion is for people, I have allocated K2.3 procurement of essential drugs billion for social protection related and medical supplies representing expenditures. Significant a 56 percent increase over the 2017 allocation. The balance will be provisions under this function used to finance health include K1.1 billion for the Public infrastructure, medical equipment Service Pension Fund and K721.2 and staff costs including the million for the Social Cash recruitment of medical personnel. Transfer Scheme. The allocation to Housing and Community the Food Security Pack has Amenities doubled to K140 million.

145. Sir, I propose to spend a total Other Functions of K816.3 million on housing and 148. Mr. Speaker, the remaining community amenities. Of this functions of Defence, amount, K564.5 million is for Environmental Protection and water supply and sanitation. This Recreation, Culture and Religion allocation will supplement the have a combined allocation of expenditure by commercial water K4.9 billion. utilities. REVENUE ESTIMATES AND Public Order and Safety MEASURES

146. Mr. Speaker, I have allocated 149. Sir, resource mobilization to K2.1 billion towards the support the 2018 Budget, is maintenance of public order and anchored on enhancing tax safety. Key interventions will administration through improved include the recruitment of security taxpayer services, risk personnel, continued management, enforcement and rehabilitation and construction of compliance. This is necessary to infrastructure and the ensure that resources are modernisation of operations of mobilized in a cost effective and law enforcement agencies. non-distortive manner.

150. Mr. Speaker, taking various 151. The details of revenue and demands into account, the borrowing estimates are as Government had to find a balance follows: that would provide fair taxation and at the same time garner sufficient resources to deliver public services and spearhead development.

REVENUE MEASURES percent on the value attributable to a Zambian asset in cases where Rationalization of Tax Reliefs indirect ownership or control of a 152. Sir, I propose to discontinue Zambian asset changes outside the 5-year income tax holidays the Republic. that is facilitated through the 156. Sir, the record of the Patriotic Zambia Development Agency. In Front Government in delivering place of the tax holiday, I propose infrastructure to the people is to grant accelerated depreciation unmatched. To assist in for capital expenditures by mobilizing funds for the qualifying investments in priority Infrastructure Development sectors. Fund, I propose to introduce an 153. Mr. Speaker, I also propose excise duty of K2 per 50 Kg of to remove the allowable cement. deduction for contribution to 157. Mr. Speaker, the approved pension funds of K255 Government in 2004 introduced a per month as there is already relief presumptive tax for individuals given at the time one gets their operating public service vehicles lump sum payment and annuities. based on vehicle sitting capacity. Strengthening the Tax Base However, these amounts have not been adjusted since 2004. I 154. Sir, intellectual property therefore propose to adjust the such as trademarks, patents and presumptive tax rates upwards by brands are assets that can be 50 percent. traded. However, such trades are currently not taxed unlike the case 158. Sir, the Commissioner- is with other properties such as General can charge a base tax shares, mining rights and land. I, where there is insufficient therefore, propose to introduce information on which to estimate property transfer tax at 5 percent tax payable by a business. on the transfer of intellectual Currently, the base tax is K150 per property. annum and has remained so since 2008. I, therefore, propose to 155. Mr. Speaker, to cast our tax adjust upwards the base tax rate net wider, I propose to impose a from K150 to K365 per year. property transfer tax at a rate of 5

159. Mr. Speaker, it is 163. Mr. Speaker, I further international practice that related propose to introduce specific parties are treated the same under excise duty on manufactured certain rules such as transfer tobacco and provide for a separate pricing. Accordingly, I propose to tariff classification for other mandate all businesses to disclose manufactured tobacco which are their related parties for income tax currently classified together with and property transfer tax cigarettes. purposes. Support to Business Growth and 160. Sir, in order to provide Diversification further clarity, I propose to revise 164. Sir, diversification away the definition of residence for from dependence on mining is key persons other than individuals as to attaining economic resilience. I well as the definition for therefore propose to: management or consultant fee. i) Remove customs duty on 161. Mr. Speaker, in order to various inputs that are used in prevent revenue leakages through the manufacture of stock feed misclassification, I propose to: and fish feed.

i) Align the excise duty at 125 ii) Exempt unprocessed and percent on methylated spirits, semi-processed tobacco from denatured alcohol and VAT. undenatured alcohol of heading 2207; and 165. Mr. Speaker, in my last ii) Introduce registration of all address, I introduced a surtax on importers of methylated spirit selected imported products that and denatured alcohol. are locally produced in order to support the growth of the 162. Sir, I propose to increase the domestic industry. In line with customs duty on unmanufactured this policy, I propose to extend the tobacco and tobacco refuse to 25 number of items on which the percent from 15 percent. This will surtax applies and also to remove harmonise the tax treatment with raw materials that were all other types of tobacco which erroneously put on the surtax are currently attracting a customs schedule. duty of 25 percent.

166. Sir, I propose to reduce the similarly for those who fail to customs duty on bricks that are issue tax invoices. used in the formation of furnaces Submission of tax returns and from 15 percent to 5 percent to payments reduce the cost of manufacturing. 171. Mr. Speaker, I propose to 167. Mr. Speaker, risk change the due dates for management is a crucial part of submission of the VAT returns any business. As such, any from the 16th to the 18th of every undertaking to cover risk of the month. This will differentiate this insured and the insurer must be date from the date for submitting cost effective. To reduce the cost of withholding VAT returns, which insurance, I propose to remove the also falls on the 16th of every insurance premium levy on month. reinsurance. 172. Sir, I also propose to provide 168. Sir, to discourage the use of for the same due date of the 14th inefficient electrical appliances of every month, for submission and encourage the use of and payment of withholding tax, alternative sources such as solar to ease compliance and improve and gas, I propose to increase tax administration. customs duty on electric geysers and stoves to 40 percent from 25 Housekeeping Measures percent. 173. Mr. Speaker, I propose to 169. Mr. Speaker, to promote the make amendments to the Income use of electronic payment devices Tax, the Property Transfer Tax, the and make it easier to collect and Value Added Tax, the Customs monitor taxes, I propose to and Excise, and the Skills remove the customs duty on point Development Levy Acts. This is of sale machines and SIM cards. intended to update, strengthen Streamlining of the penalty regime and remove ambiguities in certain provisions of tax legislation to 170. Sir, I propose to introduce make tax administration more penalties in the VAT Act, and the effective. These measures are Customs and Excise Act for revenue neutral. taxpayers that fail to furnish records upon request and

Non – Tax Revenue Measures reflective basis, I propose to revise upward fees and charges collected 174. Sir, in order to improve by various Government service delivery of public institutions that have not been broadcasting and promote growth revised in a long time. of the media industry, I propose to: 177. Mr. Speaker, the total net revenue gain from the various i) Introduce a landing rights measures I have proposed above charge at the rate of K3, 150 per is K2.9 billion. television channel which has less than 35 percent local content 178. Sir, the tax and non-tax except for educational and revenue measures I have scientific channels. announced today will take effect ii) Increase the TV levy to K5 from 1st January, 2018. per month. I further propose to change the current collection PART IV through electricity bills to CONCLUSION subscriber management service licensing system. 179. Mr. Speaker, with the launch of Seventh National Development 175. Mr. Speaker, in line with the Plan, our country has renewed its strategy of moving towards a commitment to the attainment of prosperous smart Zambia, I the Vision 2030 to be a prosperous propose to migrate all motor middle income country. We must vehicles to the electronic number learn from our past challenges if plate system at a reduced fee of we have to charter the desired K500 from the current re- path to our destination. We must registration fee of K975. The strive to foster unity of purpose in system will enhance security, advancing our nation’s interests enable easy payment of various and the well-being of our people. road user charges such as road We must remain resolute and tolls as well as the renewal of patriotic, never allowing our sight driver’s licences online. to slip from the development 176. Sir, in order to ensure that goals we have set for ourselves. Government collects the much 180. Sir, let me assure this House needed revenue on a cost that our future is bright and secure

37 under the able leadership of His goals under the Seventh National Excellency, Mr. Edgar Chagwa Development Plan. It gives hope Lungu the President of the and practical support to our youth Republic of Zambia. With His who are the key to our prosperous Excellency’s visionary and future. It protects the vulnerable determined guidance, we are on within our midst so that no one is the path to making our great left behind. nation a prosperous and more 183. inclusive society. Mr. Speaker, a new Zambia is possible where we can all adopt a 181. Mr. Speaker, the Patriotic broad-based development Front Government is however, agenda. A Zambia where cognizant of the fact that this is not everyone is accountable for their an easy path. There are risks and actions; where the leadership challenges at every turn. We must governs justly, invests in its therefore remain fiscally citizens and creates opportunities disciplined for us to achieve the for all; and citizens rise to the desired fiscal fitness. We must occasion to perform their civic sacrifice and raise more of our duties and responsibilities. own resources to finance our 184. development. We must borrow Sir, the Patriotic Front less and where we need to borrow, Government has always placed it should be for projects that will national interest at the centre of its generate growth and enable us to development agenda. The 2018 repay. We must ground our Budget provides practical aspirations on a realistic measures to diversify the understanding of our current economy, create jobs, reduce financial position. poverty, protect the vulnerable and reduce inequalities among 182. Sir, this is what the 2018 our people. The 2018 Budget is Budget delivers. It provides a therefore, for all Zambians and I realistic platform for the commend it to this august House. attainment of our development 185. Mr. Speaker, I beg to move