The Minister of Finance and Development Planning, Kenneth Matambo, will tomorrow (Monday) address the nation by delivering the National Budget for 2013-2014 financial year at the National Assembly.
Motswedi Securities Analyst Garry Juma’s sentiments regarding the national budget is the expectation from the government to continue on a ‘tight budget’ and people do not expect any adjustment on Value Added Tax (VAT) in order to boost consumption.
In terms of civil servants salaries, Juma said that “we are so cautious given the tight government budget and if there is going to be any civil servants salary increases, it will merely be cost of living salary adjustment and we don’t expect it to be more than 5 percent. We also expect the Minister to introduce more poverty eradication initiatives and projects aimed at reducing unemployment”.
┬áThe Motswedi Securities Analyst also pointed out that they expect another smaller budget surplus due to expected once-off revenue from Southern African Customs Union (SACU) and a reduction in government expenditure. He added that chances of a budget deficit are very slim, given the expected once off SACU revenue and a reduction in government expenditure.
“We expect the government to continue supporting and encouraging private-sector led economic growth in order to reduce government contribution to GDP. The move will also create more room for private sector participation in the economy,” said Juma.
He noted that in terms of the developmental budget, which is crucial for propelling the country’s GDP growth, they expect only those projects that are crucial to the country’s economy to be prioritized. Juma added that they also expect more emphasis on maintenance and refurbishment of existing infrastructure projects.
“As a result, some large projects might be shelved or delayed altogether to promote efficient and effective resource allocation,” the analyst said.
┬áJuma pointed out that while the government has announced its intention to reduce the wage bill, which has been unsustainably high over the years, there is a general concern that the move will likely increase the country’s unemployment rate.
“This may further impact on those sectors that do business with government workers,” he said.
Juma added that, in the long run, the savings accumulated from the initiative could be used to fund other public programmes.