Muhabi Lungu rubishes 2014 PF budget

Movement for Multi Party Democracy (MMD) presidential spokesperson Muhabi Lungu has described the 2014 budget as reckless, irresponsible and less than truthful.

Lungu has also bemoaned the two year projected wage and recruitment freeze by government as a contradiction by a government that promised more jobs upon assumption of office.

Featuring on Muvi Television’s The Assignment Programme, Lungu said the Patriotic Front government had put a lot of borrowed money in people’s pockets.

“I think that there are three adjectives for this budget and I apologize for the harshness of my word, the first one is I think that the 2014 budget is an irresponsible budget, the 2014 budget is a reckless budget, the 2014 is in fact in many of the chapters we can go through less than truthful in terms of what its aims and objectives will be,” he said.

“I think it is reckless, irresponsible and less than truthful I think that this budget is probably the most dangerous budget presented in the last five years.”

Lungu said the budget was anchored on borrowed resources which could lead to a further increase of the deficit.

“When you look at the breakdown of that expenditure 29% is from domestic revenue, then you have 2.9% which is grants, then you have a whooping K10 billion which is borrowing and this is both domestic borrowing as well as external borrowing,” he said.

“If you count the total percentage of the budget as of borrowing what comes out is that the 10% as a percentage of 42 billion comes to 25 percent of this budget is actually through borrowing. That is VERY DANGEROUS and I cannot remember when last that happened in this country.”

Lungu said: “The level of domestic borrowing in this budget has been put at 2.5 percent but when the fifth and sixth National Development plan were being developed the target was to try and take domestic borrowing to the percentage of 1% or less for obvious reasons. The higher the percentage of domestic borrowing is that what you are doing is that you are crowding out the private sector.”

He said the government had put borrowed money in people’s pockets.

“The threshold for Pay as You Earn has been increased to K3, 000. They have put more borrowed money in people’s pockets. It is a fact and the problem with borrowed money is that you have to pay back at some point,” Lungu said.

“I was looking at the threshold of K3, 000, invariably it is a good thing but it is balancing the scale between the capacity for you to raise the domestic revenue visa a vie borrowing, in this case you may have short term gains because there are more people now that have been captured within the threshold of K3, 000 but if the borrowing side causes inflationary pressures, it causes interest rates to go up, it causes us to pay higher fees in terms of debt servicing.”

Lungu said the imminent two years wage freeze was being downplayed.

“So in order to prevent a further escalation of borrowing they have decided that for two years in the future there will be a molitorium of wage freeze. We are underplaying this fact,” he said.

“The wage freeze in the next two years in the public service within those particular years there will be a freeze in recruitment, the police, nurses and teachers will not be recruited. According to this budget there will be a total of 160 rural health posts that will created, there will be 200 and something high schools that will be built and other infrastructural projects which need manpower so if you are saying that if these projects are going to take place in the next two years then you will not be recruiting, what are you saying? What is the logic there? You mean they will be completed and will remain vacant as white elephants.”

He said, “It is unlikely the way I know politicians in this country that in an election year 2016 or even in a pre-election year in 2015 that there can be a successful implementation of the wage freeze. I think that it is highly unlikely that a government that promised so much can embark on a recruitment freeze in an election year. When they promised that they will create 5 million jobs in five years. “

He wondered why the issue of subsidies had been twisted by the PF government.

“The idea of removing fuels subsidies, maize was precisely to reduce the size of expenditure and reduce fiscal deficit yet that same reason is given for why there has been an expansion of the deficit. I find it hard to believe,” he said.

Finance Minister Alexander Chikwanda on Friday presented a K42 billion budget.

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