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Hon. Felix Mutati

ZAMBIA - Finance

A Class Recounting

Minister, Finance


Hon. Felix Mutati previously served as Minister of Energy and Water Development from 2002 to 2004, and Minister of Commerce, Trade, and Industry from 2004 to 2011. In addition to holding the position of Minister of Finance, he is also the main representative of the Zambian political Party the Movement for Multi-Party Democracy. He is also a chartered accountant.

TBY talks to Hon. Felix Mutati, Minister of Finance, on making difficult but necessary decisions, unlocking new economic wheels, and strengthening transmission ties with Kenya and Tanzania.

What was the strategic thinking behind the development of the “Zambia Plus” economic recovery program?

Over the last two years, Zambia has endured difficult times. The economy slowed to such an extent that real GDP growth was around 3%, debt levels were growing, and arrears were building. The economy was literally facing strong headwinds. When developing Zambia Plus, the main focus was to allow growth by setting the direction and benchmarks through a homegrown program, and making strategic decisions that would assist a recovery. Zambia Plus is fundamentally a homegrown program, where on the plus side we engage with cooperating partners who supplement our efforts to boost the economy.

How has the economy performed since January 2017?

Since January there have been some signs of recovery, such as stability in the foreign exchange, inflation dropping, and the easing of liquidity. In January 2017 our tax revenue collection was in excess of ZMK3.4 billion, which was above target, showing that things are beginning to turn. Challenges remain, such as access to liquidity, our profile in terms of the ease of doing business still remains low, and we are still continuing to battle with regard to the fiscal deficit. We are challenged in terms of how we maintain a consistent policy for recovery, particularly going into 2017. We have begun by addressing some of the critical decisions and issues that will unlock the movement and turn the economic wheels.

What is the government doing to pay off its accumulated arrears?

Since December 2016 we have raised financing of ZMK2 billion, and a big portion of that has gone into liquidating arrears. This is important because it gives life to the private sector to create and sustain jobs, and also creates the capacity for us to be able to collect taxes. Ultimately, clearing arrears is important, and this week, for example, we are paying almost ZMK150 million toward clearing pension arrears, lifting up the lives of our people who have worked so hard and still remain on the streets. In the budget for 2017, we have a provision for ZMK6.8 billion to deal with the arrears.

What further revisions to policy are planned for the next year?

There are some structural issues that we must attend to, such as the legal reform that is necessary to underpin fiscal consolidation. We are revising the Public Finance Act to ensure fiscal prudence and accountability. We are working on the budget and planning bill, the main objective of which is to assure the integrity of the budget process, participation, and execution. The ZPPA Act will also be amended to address leakages and overpricing in the procurement process. We will only make investments in projects if we can afford them.

How is the Ministry planning to negotiate the upcoming support program with the IMF?

We are taking ownership and responsibility for the execution of our own economic recovery program. External organizations, including the IMF, as well as the international business world, and the private sector, must feed into this program. In past years there has been criticism of the IMF in that they do not fit into the ideas of countries about how to reform their economies. It is not helpful to have ideas imposed on any economy from the outside. As members of the IMF we are entitled to drive our own economy, whilst accessing the opportunities that are provided to us by membership in entities like the IMF and World Bank. However, in order to address issues in the energy and agriculture sectors we need significant grant monies. To rely on the government budget alone is impossible. We intend to connect Zambia, Kenya, and Tanzania’s transmission systems, but the Zambian portion of that would cost USD500 million. The EU has so far committed a grant of EUR40 million to this project, and we do not believe that one should have to walk alone in such projects.



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