LUSAKA, Oct 10 (Reuters) - Zambia's Finance Minister Situmbeko Musokotwane said on Saturday while the country would raise borrowing to finance its budget deficit, it would take care not to overborrow.
In a budget speech on Friday, Musokotwane said domestic borrowing in Africa's biggest copper producer would rise to 3 percent of GDP in the current financial year from a targeted 1.8 percent, before easing to 2 percent in 2010.
On Saturday, he told a media briefing that Zambia's plans to increase borrowing was in line with global trends as countries deal with the world's worst economic crisis in decades.
'Many countries in the world are expanding deficit borrowing. But we are still mindful that we should not overborrow. In developed countries deficit borrowing represents around 8 percent of GPD,' Musokotwane said.
Zambia planned a 16,717.8 billion kwacha ($3.6 billion) budget in 2010, with 14.5 percent covered by donors and 13.1 percent financed through internal and external borrowing.
Officials had warned taxis or government debt would have to rise to fund the fiscal gap due to expected lower donor funding, which usually makes up 25-30 percent of the budget.
Donors are worried about a perceived lack of urgency in tackling graft. A change in the budget cycle to calendar years from April to March previously may also have affected pledges.
Musokotwane said before drafting the budget, the government met with donors who made pledges he hoped would be met.
He also defended the scrapping of mining windfall taxes and said economic diversification would not succeed if the mining sector collapsed.
'The after-shocks of the global economic crisis will go on for some time and for us a key response is economic diversification, which will only succeed if we continue to encourage the key sector of mining.'
(Editing by Phumza Macanda and Andy Bruce) (For more Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/ ) Keywords: ZAMBIA BUDGET (phumza.macanda@thomsonreuters.com; +27 11 775 3152; Reuters Messaging: phumza.macanda.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
In a budget speech on Friday, Musokotwane said domestic borrowing in Africa's biggest copper producer would rise to 3 percent of GDP in the current financial year from a targeted 1.8 percent, before easing to 2 percent in 2010.
On Saturday, he told a media briefing that Zambia's plans to increase borrowing was in line with global trends as countries deal with the world's worst economic crisis in decades.
'Many countries in the world are expanding deficit borrowing. But we are still mindful that we should not overborrow. In developed countries deficit borrowing represents around 8 percent of GPD,' Musokotwane said.
Zambia planned a 16,717.8 billion kwacha ($3.6 billion) budget in 2010, with 14.5 percent covered by donors and 13.1 percent financed through internal and external borrowing.
Officials had warned taxis or government debt would have to rise to fund the fiscal gap due to expected lower donor funding, which usually makes up 25-30 percent of the budget.
Donors are worried about a perceived lack of urgency in tackling graft. A change in the budget cycle to calendar years from April to March previously may also have affected pledges.
Musokotwane said before drafting the budget, the government met with donors who made pledges he hoped would be met.
He also defended the scrapping of mining windfall taxes and said economic diversification would not succeed if the mining sector collapsed.
'The after-shocks of the global economic crisis will go on for some time and for us a key response is economic diversification, which will only succeed if we continue to encourage the key sector of mining.'
(Editing by Phumza Macanda and Andy Bruce) (For more Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/ ) Keywords: ZAMBIA BUDGET (phumza.macanda@thomsonreuters.com; +27 11 775 3152; Reuters Messaging: phumza.macanda.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
