CSO DEBT ALLIANCE HIGHLIGHTS CRITICAL 2023 FINANCIAL CHALLENGES

By Scoop Reporter

INCOMPLETE debt restructuring, illicit financial flows, and inadequate domestic resource mobilization have worsened the financing gap, Civil Society Organisation Debt Alliance (CSODA) Coordinator Peter Mumba has said.

This, he said, has hampered the nation’s progress towards its development objectives, noting that addressing those financial challenges was crucial for Zambia to achieve its 8NDP targets.

He said the government needs to finalize the debt restructuring process to unlock fiscal space.

Mr. Mumba said to combat illicit financial flows, the government must develop a robust policy and legal framework that enables effective tracking and prosecution of illicit financial activities.

He said the Revenue Authority should enhance tax collection in key sectors such as mining and ensure that tax evasion was minimized by rigorously monitoring mining activities.

According to the 2023 Annual Progress Report on the 8NDP implementation indicated that only 46 percent of the targets for 2023 were met, and out of 1,053 targets, 485 were achieved, 109 were partially met, and 459 were unmet. 

The report further indicated that the economic transformation and job creation strategic development area experienced the highest financing gap at 76.9 percent. 

He said despite planning to spend K107 billion on 8NDP programs, only K48.3 billion was allocated, resulting in a financing gap of K58.7 billion.

“Significant revenue leakages through illicit financial flows, including tax evasion and trade mis-invoicing, have fostered the situation.

“The incomplete debt restructuring process poses additional risks to Zambia’s debt sustainability, affecting credit ratings, access to capital markets, investor confidence, exchange rates, and fiscal policy flexibility,” he said.

He further said the Financial Intelligence Centre (FIC) reported K56.5 billion in suspected illicit financial flows in the third quarter of 2023 alone, which could close 96 percent of the 2023 8NDP financing gap.

He revealed that tax audits conducted between 2014 and 2020 suggested that Zambia could increase tax revenues without raising tax rates to address a tax gap.