2017年-IMF国际货币组织全球_Zambia_Selected_Issues_63页_1mb

ZAMBIA: Fiscal Sustainability and Public Debt Analysis

Core Content

This document, prepared by the IMF staff team for the periodic consultation with Zambia, analyzes the country's fiscal sustainability and public debt situation as of October 2017. It highlights the challenges in maintaining fiscal stability and the implications of rising public debt on the economy.

Main Points

A. Background

• Fiscal Imbalances: Large fiscal imbalances and a rapid increase in public debt since 2011 have raised concerns about the sustainability of fiscal policies in Zambia.
• Shift in Fiscal Stance: From a prudent fiscal stance (average deficit of 1.6% of GDP in 2007-11), the country shifted to loose fiscal policies in 2012, leading to a fiscal deficit of 6.4% of GDP in 2013.
• Revenue and Expenditure Trends: The lack of policy response to shocks led to declining revenues and increased spending, worsening fiscal deficits in 2014-15.
• Debt Sustainability: By 2015, the risk of debt distress had deteriorated from low to moderate. In 2017, it increased to high due to projected high borrowing requirements and rising external debt.

B. Drivers of Fiscal Performance and Public Debt

• Narrow Tax Base: Zambia's tax-to-GDP ratio was significantly lower than the SADC average (14% vs 23.7% in 2015).
• Tax Exemptions and Thresholds: High tax exemptions and large thresholds explain the low tax productivity. The VAT C-efficiency rate was 0.28% in 2015, much lower than the SADC average of 0.45%.
• Corporate Income Tax: Zambia's corporate income tax productivity was also low, yielding only 1.5% of GDP in 2015 compared to the SADC average of 3.5%.
• Income Tax: The personal income tax was limited by a high tax-free threshold, which has tripled since 2011, leading to a large portion of wage earners being exempt.
• Trade Taxes: Declining trade tax collections due to exemptions and reduced import duties, especially from regional free trade areas.
• Foreign Grants: A sharp decline in foreign grants since 2012 due to donor consolidation and limited progress in public financial management.

C. Unsustainable Expenditure Levels

• Spending Outpacing Revenue: Current spending exceeded domestic revenue mobilization, leading to significant fiscal pressures.
• Wage Bill: The wage bill was a major component of spending, reaching nearly 52% of domestic revenues in 2014.
• Subsidies: Large and poorly targeted subsidies for energy and agriculture contributed to spending overruns. Fuel and electricity subsidies benefited mainly the wealthy, with 92% and 85% of the subsidies going to the top 10% and 20% of the population, respectively.
• Debt Service: Debt service accounted for 24.2% of domestic revenues in 2016, further straining the budget.

D. Rapidly Rising Public Debt

• Debt Increase: Public debt rose sharply from less than 21% of GDP in 2011 to 61.2% in 2015, driven by increased reliance on external borrowing and Kwacha depreciation.
• External Debt: The share of external debt in total public debt increased from 40% in 2011 to 66% in 2015, with concessional debt from multilateral sources dropping to 25%.
• Borrowing Costs: Despite raising $3 billion in international capital markets, the effective borrowing cost in Kwacha was three to four times the nominal interest rate due to exchange rate depreciation.

E. Fiscal Sustainability Analysis

• Sustainability Indicators: The study uses the primary balance gap and tax gap indicators (Blanchard's approach) to assess fiscal sustainability.
• Debt Dynamics: Without additional fiscal consolidation measures, the debt burden is expected to exceed 60% of GDP by 2019, moving Zambia to high risk of debt distress.
• Credit Ratings: Major credit rating agencies downgraded Zambia's sovereign rating in 2016 due to widening fiscal deficits and weak debt dynamics.

Key Information

• Fiscal Deficit: Increased from 1.6% of GDP in 2007-11 to 6.4% in 2013 and averaged 6.6% of GDP in 2014-16.
• Public Debt: Rose from less than 21% of GDP in 2011 to 61.2% in 2015, with external debt reaching 66% of total public debt.
• Exchange Rate Risk: The Kwacha depreciated sharply in 2015, increasing the effective borrowing cost.
• Subsidy Impact: Fuel and electricity subsidies were poorly targeted, benefiting mainly the wealthy.
• Credit Rating Downgrades: Occurred in 2016, reflecting concerns over fiscal sustainability and economic performance.

Policy Recommendations

• Fiscal Consolidation: Additional fiscal consolidation measures are needed to address the growing debt burden.
• Tax Reform: Reforming the tax system to improve tax productivity and broaden the tax base.
• Subsidy Restructuring: Restructuring subsidies to make them more targeted and efficient.
• Exchange Rate Management: Addressing exchange rate depreciation to reduce borrowing costs.
• Public Financial Management: Strengthening public financial management to improve the ability to access foreign grants.

Conclusion

The document concludes that without further fiscal consolidation and structural reforms, Zambia's fiscal and debt sustainability will remain under threat. It emphasizes the need for improved tax collection, reduced subsidies, and better management of public finances to ensure long-term macroeconomic stability and sustainable growth.