Donors Respond Positively to Budget

I wrote a couple of days ago, wondering if the World Bank was lining up to criticise Zambia's newly announced reforms to its mining taxes. However, in their public responses to the budget, the Bank and a number of other aid donors appear broadly positive. "Overall, the budget is good," according to the Bank

The Post reports a number of comments on the recent budget from Zambia’s major donors: the EU, the US, UK and the World Bank, none of which questioned the new tax regime for mining. The EU Head of Delegation challenged the reduction in VAT, US representatives praised the focus on social spending, while the British Ambassador appeared relieved Magande wished to continue the co-operative relationship with aid donors and World Bank country manager Dr Kapil Kapoor advised the government to ensure that revenue proceeds from windfall mining taxes are spent on projects that will benefit poor people. “Overall, the budget is good, especially that key sectors such as health and education have been prioritised, but what remains is to grow the economy and sustain it and also implementation of major projects is a positive development,” said Dr Kapoor. “But it is not clear how revenue proceeds from windfall mining taxes will be utilised and we advise the government to ensure that funds are spent on projects that will benefit poor people who are in the majority.”

We did however, also see the first negative response to the developments from the Chamber of Mines, which represents the major mining houses. Business Day reported Fred Bantubonse, spokesperson voicing concern about the changes. “If you tear up a contract today, what value has the new one got?”

In an interesting, detailed and highly critical editorial on both the general budget process and it contents, The Post still finds, “The good news is that the mines are now going to be taxed in a variety of areas and in a manner that brings substantial revenue.” The paper enters an important caveat: “in public interest it would be good if the Minister of Finance could also give us the downside - what if the price of copper is below $2.50/lb? What would be the projected revenue for the government?”