PF 2014 Budget unveiled with 2 years wage freeze

Chikwanda arriving at Parliament

Chikwanda arriving at Parliament

A K42.68 billion National Budget for 2014 has been presented by Finance Minister Alexander Chikwanda.

And the budget which is the third for PF government has proposed a wage freeze on Public Service salaries for a period of two years.

The Budget whose theme is “Moving Forward To Consolidate Growth and Social Justice, in Peace and Unity” represents 30.7 percent of Gross Domestic Product (GDP).

The Finance Minister who presented the Budget to Parliament Friday October 11, 2013, said the 2014 budget will be financed through domestic revenues of K29.54 billion as well as grants of K2.63 billion from cooperating partners.

Chikwanda said that the balance of K10.5 billion will be met through foreign and domestic borrowing.

The Minister has also proposed a two year wage freeze on public service salaries and deferred new recruitments to 2015. He said the freeze was meant to create fiscal space for the provision of basic social services and reduce money spent on the public service wage bill.

Chikwanda said in the next two years the PF government will concentrate on addressing structural anomalies in the remuneration structure.

“In order to provide sufficient fiscal space for the provision of basic social services and investment in public infrastructure, and reduce the proportion of revenues spent on the public service wage bill, I propose a two-year public sector wage freeze,” said Chikwanda.

The public service wage bill was projected to be at 52.5 percent in 2014. Mr Chikwanda said in order to stop distortions in the public sector payment system, Government had adopted a 10-year integrated competitive total remuneration strategy aimed at harmonising pay for similar positions across the three arms of government.

The said the strategy also entailed a review of public pensions, enhancement to the Public Service Performance Management System and creation of a public service credit union.

Chikwanda said there would be changes to the Public Service Pension Fund (PSPF) in which the retirement age and the basis for calculating pensionable emoluments would be revised.

The Minister also said the government had embarked on a programme to strengthen cash management by addressing the challenges associated with large unutilised balances because keeping funds idle denied resources from programmes that required funding.

And Chikwanda has said that as a demonstration of government’s commitment of putting more money in people’s pockets, he has proposed to increase the current exempt threshold of Pay As You Earn by more than 36% from K2,200 to K3,000 per month.

He said that the measure is expected to result in revenue loss of K956.6 million. The Finance Minister has also proposed to increase exercise duty on airtime from 10 percent to 15 percent.

Chikwanda further proposed to revoke the statutory instrument that suspended excise duty on clear beer so that the substantive duty rate of 60% is once again effective. He said the revenue gain from the measures is K514.8 million.

The also proposed to increase the property transfer tax rate from the current 5 percent to 10 percent, a measure expected to generate an additional K100 million.

Chikwanda has also proposed to spend 9.9 percent of the Budget, or K4.23 billion on Health services in 2014. He said that K245.7 million is provided for the construction and rehabilitation of hospitals, health centres, training schools and the upgrading of tertiary health care.

The also increased by 24.3 percent the budget towards the purchase of essential drugs and medical supplies to K738.7 million from K594.1 million in 2013 and allocated a further K66.6 million towards medical equipment including specialized equipment.

Chikwanda has also proposed to spend K8.61 billion or 20.2 percent of the budget on education. He says of the total amount allocated to the education sector is K1.28 billion which will go towards the construction of education infrastructure.

The Minister said this will include building of 53 new Secondary Schools and the upgrading of 220 basic schools into secondary schools.

Chikwanda concluded his speech by praising President Michael Sata whom he says is hard working.