President Lungu Restores Fiscal And Macro Economical Stability

President Lungu Restores Fiscal And Macro Economical Stability.

PRESIDENT Edgar Lungu says he has taken bold decisions that will restore fiscal and macroeconomic stability.

During a press conference at State House, President Lungu said taking bold decisions was the only way to address the challenges the county was going through.

“To address these challenges, I have taken bold decisions that will restore fiscal and macroeconomic stability. Failure to adhere to cost-reflective pricing in petroleum procurement has had a negative impact on the budget. By the end of this year, Government will have spent in excess of US$300 million (aboutK3.6 billion) in subsidising fuel pump prices. An additional US$ 200 million (approximately K2.4 billion) is in arrears and will have to be paid next year. This is clearly not sustainable,” President Lungu said.

He said in the wake of reduced power generation, the government has had to import emergency power in 2015 to sustain the country’s economic activities.

President Lungu said between September, 2015 and the end of the year, government will have spent over US$40 million for emergency electricity
import which was not unaffordable.

President Lungu said to reduce the pressure on the treasury, he directed the Ministry of Energy and Water Development, Energy Regulation Board and Zesco to implement the new electricity tariff schedule and progressively move to full cost-reflective tariffs thereafter; and ensure that back-to-back contracts were put in place between the providers of the emergency power to Zesco and the mining companies that consume the bulk of the power.

“Additionally, I direct the Industrial Development Corporation (IDC) and ZESCO to facilitate the speedy development of alternative sources of energy with the view to have some of them come on stream next year,” he said.

President Lungu on agriculture subsidies said the Minister of Commerce must expedite active participation of the cooperative movement in crop marketing and farmer input activities so that the Food Reserve Agency limits its role to maintain the strategic reserves.

He said the Minster of Agriculture must ensure the successful implementation of the e-voucher system in order to scale back on auxiliary costs associated with Farmer Input Support Programme and support agriculture diversification.

President Lungu said the financing of the ambitious infrastructural development programme had to be re-aligned to ensure budgetary sustainability.

“To this effect I am directing that all Government Ministries, Provinces and Spending Agencies should cease the procurement of, or the entering into contracts for, new works including in the road sector. Therefore, focus should be on the completion of on-going projects,” President Lungu said.

“All Government Ministries, Provinces and Spending Agencies should engage the Attorney-General to review committed projects signed but not yet commenced with a view to defer where appropriate; and regarding on-going road projects, in particular, the Minister of Works and Supply shall embark on a phased approach in the implementation of road projects over a longer period and employ other options other just continuous use of bitumen.”

President Lungu said no government department will procure works or enter into contracts for goods or services for which there is insufficient or no budgetary allocations, as approved by Parliament.

“This implicitly means that all Government departments will have to work out their respective programmes. Public procurement has become an avenue through which Government has been losing huge sums of funds via cartels, unrealistic pricing of goods and services and other unethical practices that are aimed at manipulating the system for personal gain. I am, therefore, directing the Zambia Public Procurement Authority, to expedite the publication of benchmark prices, particularly in areas of high spending, so as to ensure value for money in public procurement,” President Lungu said.

He directed various units of Government charged with the responsibility of investigation and prevention of unethical practices such as corruption and bribery, to be on high alert and quell any potential frauds in the public procurement system. President Lungu said his Government will not protect any individual or business entity that will be found engaging in corruption.

He said in order to reduce the cost of running government the establishment of the National Airline was deferred until such a time that the economy was able to afford the high establishment costs.

President Lungu said foreign travels by Ministers, Government and Quasi-Government officials will be limited to essential meetings only, with the size of delegations restricted to the barest minimum.

“In this regard, I am directing all Government Ministries, Provinces and Spending Agencies to start utilizing the skills and resources available in our missions abroad. Further, local travel by ministers and other public servants must be significantly minimised.

The Secretary to the Cabinet shall urgently facilitate commercial bank-funded loan schemes for personal-to-holder vehicles and household furniture which more akin to personal benefits rather than to the delivery of public services. Further, the Secretary to Cabinet should expedite the review of the conditions of service for constitutional holders to make them less onerous,” he said.

He said the establishment of new missions abroad was critical in enhancing visibility and the country’s economic interests but that. Given the current budgetary pressures, it had become imperative that Government realigned expenditure in the area.

President Lungu suspended the creation of new missions abroad and directed the Minister of Foreign Affairs to review and rationalise the size and number of the missions.

He said the Ministry of Foreign Affairs must implement the Cabinet decision to apply for mortgages as opposed to renting properties in foreign missions saying that it would significantly reduce the cost of running our missions.