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World Bank, IMF advise govt on resource management

World Bank, IMF advise govt on resource management
By Joan Chirwa
Saturday August 25, 2007 [04:00]

WORLD Bank and IMF research officials have advised the Zambian government to ensure transparent management of natural resources in view of the expected increase in fiscal gains from copper exports. In a Joint Staff Advisory Note (JSAN) of the Poverty Reduction Strategy Paper (PRSP) progress report for Zambia prepared jointly by the World Bank and International Monetary Fund (IMF), it is noted that the mining sector in Zambia had recovered because of large investments and favourable global market conditions.

“In this regard, Zambia’s intention to join the Extractive Industry Transparency Initiative, which supports improved governance in resource-rich countries through the verification and full publication of company payments and government revenues from oil, gas, and mining, is a welcome first step,” the Bretton Wood institutions have noted.

The objective of the JSAN is to provide focused, frank, and constructive feedback to the country on progress in implementing its second Poverty Reduction Strategy Paper (PRSP)-the Fifth National Development Programme (FNDP).
The report released on Wednesday, commended the government for taking steps to reform the fiscal regime of the mining sector while preserving Zambia as a competitive, credible, and attractive investment destination.

The two Bretton Wood institutions are however calling for the inclusion of an additional revenue-sharing mechanism that would capture a higher share of mineral rents for government during the period of abnormally high international prices for minerals.
The IMF and World Bank note that such a device is currently not part of the proposed reforms.

They have also urged the government to pay its bills on time and rebalance tariffs in the utility sector such that they reflect full cost, attract investors and allow for increased access to electricity, water and sanitation services and at the same time improve Zambia’s competitiveness.

“In many utility sectors, however, tariffs are not set such that they cover full costs or are set in a manner that they decrease competitiveness or favour a particular sector,” they stated. “In addition, arrears between government agencies and utilities continue to cause difficulty within the sector.”

The World Bank and IMF also indicate that improved implementation of the Private Sector Development (PSD) and the Financial Sector Development Programme (FSDP), as emphasised in the 2007 budget speech, was essential if the growth objectives of the FNDP are to be realised.

“The PSD initiative, including Zambia’s FSDP, articulates many of the key measures needed to create a better business environment and investment climate in Zambia. The concern is, therefore, with implementation, as progress under both the PSD initiative and the FSDP has been slow,” they stated. “For example, ease of trading across Zambia’s borders continues to rank in the bottom deciles of countries in the “Doing Business” indicators, the license fee for an international telecommunications gateway remains prohibitively high, while the resolution of insolvent non-bank financial institutions has faced repeated delays and overall access to the financing system is low, with fewer than 15 per cent of Zambians holding a bank account.”

Labels: EITI, GOVERNANCE, IMF, PRSP, World Bank

posted by MrK @ 6:19 AM