Toward Stability and Growth: A Review of Pillar I & II of Zambia’s Economic Stabilisation and Growth Programme 2017-2019

The aim of this paper is to review the ESGP, particularly, its performance in 2018. The paper sets out to understand how well Zambia faired in implementing the ESGP as well as to highlight the broader fiscal trends recently. It ultimately seeks to make recommendations about how Zambia can revive its path to economic stability and growth. The paper focuses tightly on the first two pillars of the ESGP, i.e. (i) restoring budget credibility; and (ii) enhancing domestic resource mobilisation and refocusing public expenditure. The first pillar of the ESGP aimed to restore Budget credibility through improved budget execution, containing the wage bill, phasing out costly subsidies and improving transparency and accountability. The second pillar sought to enhance domestic resource mobilisation by augmenting modernisation and automation of revenue; expanding the tax base to the informal sector; improving collections from property taxation; increasing road tolling; stemming illicit financial flows; and refocusing public expenditure. Our analysis revealed that generally, during the ESGP period, the Government managed to contain the wage bill by setting a quantitative wage ceiling of 9% of GDP and restricting employment to frontline staff in health and education. By reforming the Farmer Input Support Programme (FISP) through the e-voucher system, programme costs were lowered thus reducing the burden on the Treasury. The Government also put in place measures to improve tax and non-tax administration resulting in improved VAT collections and higher than planned revenues from road tolls. Further, the Public Finance Management Act was enacted, markedly strengthening the legal environment for public financial management.