Minister of Finance and National Planning Situmbeko Musokotwane has presented a proposed National Budget of 284.8 billion kwacha for the year 2027, equivalent to 28.4 percent of the Gross Domestic Product (GDP). Dr Musokotwane says 2027 will be highly financed through domestic…

Minister of Finance and National Planning Situmbeko Musokotwane has presented a proposed National Budget of 284.8 billion kwacha for the year 2027, equivalent to 28.4 percent of the Gross Domestic Product (GDP).

Dr Musokotwane says 2027 will be highly financed through domestic revenues of about K233.7 billion, representing 82.1 percent of the total budget.

Speaking when he presented the 2027 national budget in Parliament today, Dr Musokotwane added another source of financing will be borrowing from domestic and external sources amounting to K41.9 billion, representing 14.7 percent of the total budget.

Dr Musokotwane highlighted one of the government’s strategic focus since 2021 has been to strengthen fiscal sustainability through improved resource mobilisation and expenditure rationalisation.

Presenting the 2027 National budget expenditure, Dr Musokotwane revealed that about 90.5 billion kwachas will go towards general public services, 75.9 billion to economic affairs, while over K38.2 billion kwacha will be spent on education, a sector that has been given the highest allocation of the total budget at 13.4 percent.

Meanwhile, the health sector has been allocated K30.3 billion, representing 10.6 percent of the Budget on the health function.

To strengthen social protection and reduce vulnerability, Dr Musokotwane proposed an expenditure of K16.2 billion or 5.7 percent of the Budget, of which K10.4 billion will be spent on the Social Cash Transfer programme to support over 1.6 million beneficiary households up from 1.5 million in the 2026 Budget.

“The monthly transfer will be increased to K450 for eligible beneficiary households and K650 for households with eligible persons with disabilities. K5.2 billion will be spent on the public service pension funds to reduce waiting time from retirement to when the pension is paid,” he said.

As part of the government’s commitment to strengthen domestic revenues, Dr Musokotwane proposed adjustments in various taxation including the Value Added Tax rate that he proposed to adjust from 16 percent to 16.5.

The Minister also proposed to increase Corporate Income Tax rates by 5 percentage points on all income currently taxed at 20 percent and below.

“To rationalise the company tax regime which is currently characterised by preferential rates and arbitrage, I propose to increase Corporate Income Tax rates by 5 percentage points on all income currently taxed at 20 percent and below. This measure will ensure neutrality, fairness and alignment of the tax system,” he stated.

He also proposed to increase withholding tax on dividends paid by mining companies to 15 percent from zero percent, noting that this will align with tax treatment of dividends distributed by companies in other sectors.

Other tax adjustments by Dr Musokotwane was the proposal to introduce a top marginal rate of 39.5 percent PAYE tax for individuals earning above K37,000 per month.

He explained that those earning K37,000 per month and below will continue to be taxed under the current regime and will therefore not be affected by this measure.

Meanwhile, to lower capital costs and enhance Zambia’s competitiveness as a high value tourism destination, Dr Musokotwane proposed to suspend customs duty on safari vehicles, hospitality equipment and communications infrastructure.

The theme for the 2027 Budget is: Grow Zambia: From Stabilisation to Unlocking Opportunities, Creating Jobs and Improving Livelihoods for All.

The Budget presented provides a clear policy direction with specific interventions to achieve the Grow Zambia Agenda and will require concerted efforts from various stakeholders.

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