European Union Resumes Budget Support to Zambia

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European Union Resumes Budget Support to Zambia

01.10.2024 Press and information team of the Delegation to ZAMBIA

The European Union (EU) resumes its Budget Support Programme for Zambia with the first payment of EUR 20 million out of a EUR 60 million (ZMW 1.8 billion) package that will be transferred to the National Treasury between 2024 and 2026.

© EUROPEAN UNION 2024

This marks an important milestone in our partnership that reflects the EU's recognition of the structural reforms in public finance management conducted by the government of Zambia in 2021, which has been aimed at strengthening economic governance, transparency, and accountability. Despite considerable challenges, including a global health emergency and the ongoing severe drought, the Government has remained steadfast in restoring macroeconomic stability and promoting more resilient and inclusive growth.

The Budget Support Programme relies on a strong policy dialogue between the EU and the Government of Zambia. It is disbursed based on compliance with mutually agreed-upon reforms. This budget support focuses on Education, Health, and Public Procurement. The funds are transferred directly to the National Treasury, becoming part of Zambia's National Budget.

"In this time of tight fiscal constraints, it is important to clarify that EU Budget Support is not a loan. It is a non-reimbursable financial support - a grant provided as part of development cooperation assistance. The European Union grants Budget Support only to countries that have made tangible progress in implementing the Government's reform policies. These funds will help the Government mitigate the impact of the crisis on the most vulnerable Zambians," stated H.E. Karolina Stasiak, the EU Ambassador to Zambia.

"Today's signing ceremony is not just a symbolic act; it is a concrete manifestation of our commitment to building a stronger, more prosperous Zambia. We are confident that through our renewed partnership, we can create a future where every Zambian has access to quality education, affordable healthcare, and the benefits of a sound public financial management system", stated Hon Situmbeko Musokotwane, Minister of Finance and National Planning.

The European Union and its Member States, as Team Europe, will continue supporting Zambia in pursuing its development agenda and structural reforms, anchored on our shared values of sustainability, efficiency, transparency, accountability, performance, and risk management.

Background

What is Budget Support?

Budget Support is a form of development assistance through which the European Union helps Zambia by transferring development cooperation funding directly to the National Treasury. The EU support comes from the European Union budget and European taxpayers. This grant becomes part of Zambia's national budget and will not be re-paid to the European Union. The Budget Support Programme aims to help Zambia improve critical public services, like education and healthcare, and to support the country's overall development.

How does Budget Support work?

Instead of contracting specific individual projects, the EU provides funds directly into Zambia's national budget, which the government can use to finance its priority needs. This means Zambia can decide how to use this money if it aligns with agreed development objectives, policy priorities and reform programmes.

Budget Support is split into several tranches and disbursed gradually over a three-year period. Zambia has full ownership of the budget and decides how to spend it. Throughout the Budget Support Programme implementation, the EU and Zambia hold regular political dialogues to agree on key reform outcomes first and then oversee the progress, which triggers the disbursement of the next tranches of the Budget Support. The EU also provides technical assistance and expertise to support the work of the government in the given sectors. The Budget Support mechanism includes rigorous monitoring of performance indicators to ensure transparency and accountability. Through Budget Support and additional dedicated programmes, the EU engages with Zambia to strengthen public financial management (PFM) and oversight institutions.

Who will benefit?

This particular Budget Support Programme is a resilience-building programme focusing on Education, Health and Public Finance Management. The European Union supports Zambia's commitment to:

• Improve access, quality, equity and inclusiveness in primary and secondary education
• Advance the Zambia Pharmaceutical Manufacturing Initiative and contribute to improving health services by creating a local pharmaceutical industry.
• Improve the operational efficiency and accountability of public spending.

Zambians will benefit from better access to public services, education, and health services, including medicines. The Government of Zambia gains an additional fiscal space to carry out reforms in the public services sector while mitigating the impact of the food security and energy crises on the most vulnerable Zambians.
A Partnership for Development
Budget Support reflects the EU's commitment to working in partnership with Zambia to achieve sustainable development and improve the lives of its citizens. By aligning support with Zambia's own development goals, the EU ensures that its assistance is effective, flexible, and responsive to local needs. As both parties continue to strengthen dialogue and cooperation, budget support remains vital in promoting good governance, reducing poverty, and fostering economic growth in Zambia.
The European Union provides support of ZMW 10.6 billion (EUR 359 million) for 2021-2024 in the priority sectors identified jointly with the Government of Zambia: Healthcare, Education, Agriculture, Environmental Conservation, Governance, Infrastructure and others.

For more information, please contact:

Ms- Mweemba Nchimunya, Press & Information Officer, EU Delegation to Zambia & COMESA: [email protected]; +260 970 007 092

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