IMF backs govt's new mining tax
IMF backs govt's new mining taxBy Chiwoyu Sinyangwe
Wednesday February 27, 2008 [03:00]
THE International Monetary Fund (IMF) has backed the government’s decision to raise mining tax which it described as extraordinarily low. And the IMF has disclosed that the new financing package to replace the three-year Poverty Reduction Gross Facility (PRGF) would come with a smaller amount of money.
Meanwhile, the IMF cautioned the government to manage its debt contraction process to avoid fall into debt. IMF alternate executive director and delegation leader of the IMF executive directors Miranda Xafa said her institution supported the decision by the government to increase the mining tax although it could not interfere in the implementation of the new mining fiscal regime.
The government has proposed windfall profit tax at a minimum of 25 per cent, raising the mineral royalty to 3.0 per cent from 0.6 per cent, a variable profit tax at 15 per cent a taxable income above eight per cent and plan to lift corporate tax to 30 per cent from 25 per cent, a move which the mining companies in the country have protested.
“We are certain that there’s room to raise taxes because Zambia had the lowest taxes on mining not just in Africa but the whole world,” Xafa said. “But we also think it is very important to do so by negotiating with the foreign direct investors to make sure that mining remains profitable and that Zambia is able to attract new investments into mining.”
And the IMF said the PRGF which was a US $320 million has since expired and that the Fund’s mission team was currently negotiating with government for a new finance facility.
“We can’t give as much money as previous because we feel your economy is in a better shape than previously… your reserves have hit US $1billion so you have more money.”
Meanwhile, Xafa has cautioned the government to manage its future loans so that the country does not slip back into debt.
And Xafa said Zambia still had a challenge of managing the inflows from the price boom in metal prices to prepare for possible slump in high prices of commodities and ensure that the economic boom translates in improving the lives of ordinary Zambians.
Labels: IMF, PRGF, WINDFALL TAX
posted by MrK @ 6:16 AM
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