GOVERNMENT will save K5.5 billion following the removal of subsidies on fuel and maize in May last year, Finance Minister Alexander Chikwanda has said.
Chikwanda told Parliament yesterday the removal of subsidies on fuel had helped save K583 million, while that on maize had accounted for a saving of K548.9 million.
He further said the reduction on subsidies on fertiliser and seed culminated in savings of K110.6 million.
Chikwanda informed the House during its first sitting of the third session of the 11th National Assembly that of the K5.5 billion savings, approximately K4.8 billion was projected to be saved on account of the removal of the fuel subsidy.
“This estimation takes into account the increased national demand for fuel over the last two years which has approximately gone up by 40 per cent,” he said.
He was responding to MMD Senga Hill Member of Parliament (MP) Kapembwa Simbao, who wanted to know how much Government had saved as at September 30, 2013 from the removal of subsidies on fuel, maize and fertiliser.
On fuel, Chikwanda explained that between January and April 2013, prior to the removal of the subsidy, the Government facilitated payments totalling K1.2 billion through the Treasury.
He said had Government not removed the subsidy in May last year, an additional K583 million would have been required to be paid as at September 30, 2013.
On maize, he said the savings pegged at K548.9 billion was a projection based on the assumption that the same quantities of maize (62,628 tonnes) sold to the millers in the previous marketing season would have equally been sold by the Food Reserve Agency during the 2013/14 crop marketing season.
“Sir, this assumption is based on the fact that the demographic trends of the nation are not expected to change drastically over a one-year period, hence the consumption level would to a large extent be the same,” he said.
On fertiliser, he reiterated that Government had not removed any subsidy on the input, but had reduced the subsidy or alternatively increased the farmers’ contribution for farming inputs, which included seed and fertiliser, as administered through the Farmer Input Support Programme.
On measures put in place to reduce the negative impact of the removal on the subsidies on the vulnerable people, Chikwanda said the Government believed that investing public resources in tangible projects that promoted sustainable livelihoods and reduced poverty was the most effective way of mitigating people’s hardships.
“Therefore, to cushion the negative impact resulting from the removal of subsidies, Government has increased allocations to the health, education and social protection, among others,” he said.
Source: Times of Zambia
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