Minister of Finance and National Planning Situmbeko Musokotwane has presented a proposed K284.8 billion National Budget for 2027, representing 28.4 percent of Zambia’s Gross Domestic Product (GDP).
Presenting the Budget in Parliament, Dr Musokotwane said the Government expects to finance 82.1 percent of the total expenditure through domestic revenues amounting to K233.7 billion.
The remaining financing will largely come from domestic and external borrowing, estimated at K41.9 billion, representing 14.7 percent of the total Budget.
Dr Musokotwane said one of the Government’s key priorities since 2021 had been to strengthen fiscal sustainability through improved domestic resource mobilisation and more efficient public expenditure.
On expenditure allocations, the Minister said K90.5 billion had been earmarked for general public services, while K75.9 billion would go towards economic affairs.
Education has received one of the largest allocations, with K38.2 billion set aside for the sector, representing 13.4 percent of the total Budget. The health sector has been allocated K30.3 billion, equivalent to 10.6 percent.
To strengthen social protection and cushion vulnerable households against economic hardships, the Government has proposed spending K16.2 billion, representing 5.7 percent of the Budget.
Of this amount, K10.4 billion will go towards the Social Cash Transfer programme, which is expected to benefit more than 1.6 million households, up from 1.5 million under the 2026 Budget.
Dr Musokotwane said monthly payments would be increased to K450 for eligible beneficiary households and K650 for households with eligible persons with disabilities.
He added that K5.2 billion had been allocated to public service pension funds to reduce the waiting period between retirement and the payment of pensions.
Meanwhile, the Minister proposed several tax adjustments aimed at strengthening domestic revenue mobilisation.
Among the proposed changes is an increase in the Value Added Tax (VAT) rate from 16 percent to 16.5 percent.
He also proposed increasing Corporate Income Tax rates by five percentage points on all income currently taxed at 20 percent and below.
Dr Musokotwane said the measure was intended to rationalise the corporate tax regime, which he observed was characterised by preferential rates and opportunities for tax arbitrage.
“This measure will ensure neutrality, fairness and alignment of the tax system,” he said.
The Minister further proposed introducing a 15 percent withholding tax on dividends paid by mining companies, up from the current zero percent rate.
He said the adjustment would bring the tax treatment of mining dividends into line with that applied to companies in other sectors.
Another proposed change is the introduction of a top marginal Pay As You Earn (PAYE) tax rate of 39.5 percent for individuals earning above K37,000 per month.
However, Dr Musokotwane clarified that employees earning K37,000 and below would continue to be taxed under the existing PAYE arrangements and would therefore not be affected by the proposed adjustment.
In a move aimed at boosting tourism investment and strengthening Zambia’s competitiveness as a high-value tourism destination, the Minister also proposed suspending customs duty on safari vehicles, hospitality equipment and communications infrastructure.
The 2027 National Budget is anchored on the theme, “Grow Zambia: From Stabilisation to Unlocking Opportunities, Creating Jobs and Improving Livelihoods for All.”
Dr Musokotwane said the Budget provides a clear policy direction and outlines specific interventions intended to advance the Grow Zambia Agenda.
He emphasised that achieving the objectives would require coordinated efforts and the participation of various stakeholders across the economy.