By ZAMBIA NEWS FEATURES CORRESPONDENT
ZAMBIA’S revenue collection is this year expected to exceed the 2011 budget projections due to increased taxes from the mining sector, the International Monetary Fund (IMF) disclosed in a statement Wednesday at the conclusion of a visit to Zambia by its staff mission.
The observation by the IMF staff mission about increased revenue from taxes from the mining sector is poignant because there has been controversy over government’s refusal to introduce a windfall tax of the mining sector which is dependent on profits resulting from high mineral prices.
The IMF team observed that the performance of the Zambian economy continued to be good with real gross domestic product (GDP) growth in 2010 adjusted upwards to 7.6 per cent, boosted by the record maize harvest, a continued increase in copper and construction output and a rebound in tourism.
The team further observed that inflation declined in line with expectations in 2010, but has increased slightly since the beginning of 2011 (up to 9.0 per cent in February).
“Non-food price inflation remains in the low double digits. Net domestic financing of the government was 0.3 per cent of GDP higher than targeted at end-2010 primarily as a result of higher interest payments and additional expenditures on the census and voter registration. The balance of payments for 2010 experienced a record-high current account surplus of about US$600 million (3.8 per cent of GDP), with international reserves increasing to US$1.9 billion as of end-February 2011. Private sector credit has returned to pre-crisis levels in nominal terms, despite an increase in nonperforming loans and still high real lending rates,” the team reported.
The team led by George Tsibouris, said revenue collections were expected to exceed the projections in the 2011 budget, due in large part to increased taxes from the mining sector, which should provide room for additional infrastructure and pro-poor expenditures.
The team said drawing on the experience in 2010, the government will need to ensure that its maize marketing role does not hamper private sector incentives and minimizes budgetary costs. (Read more here )