Maravi

Fiscal measures in mining impress World Bank

Fiscal measures in mining impress World Bank
By Gift Chanda
Wed 17 Oct. 2012, 13:00 CAT

THE World Bank says the government's decision to avoid major changes to the mining fiscal regime will breed a sense of greater fiscal stability and reduce investor uncertainty.

And National Savings and Credit Bank (NATSAVE) managing director Cephas Chabu says the abolishment of the medical levy and removal of tax on interest earned on savings and deposit accounts will result in accelerated savings mobilisation by commercial banks.

Analysing the 2013 national budget yesterday, World Bank country representative Kundhavi Kadiresan hailed government for the fiscal measures undertaken in the mining sector.

She commended the government for resolving to avoid any major changes to the mining fiscal regime.

"This alone will breed a sense of greater fiscal stability and reduce investor uncertainty," she told a media briefing.

Recently, there had been mounting pressure on the government to maximise revenue collection from the mining sector by reintroducing the windfall tax.

The PF government has however resolved to remain adamant on reintroducing the windfall tax, but has doubled royalty tax for mining companies to six per cent in the 2012 budget.

"The proposal also to restrict operations of the Food Reserve Agency to the maintenance of the strategic food reserve stock is in the right direction and actually long overdue," added Kadiresan.

She, however, said the challenge would be in defining the size of the strategic food reserve and employing transparent and competitive processes for procuring the reserve stock.

Why on earth is the World Bank micromanaging the Zambian economy? They are going to tell the local government what the appropriate size of the food reserves are? No one at the WB went to jail when thousands of Malawians died of starvation because they told the government to sell off the food supply. - MrK

"For FRA to stop influencing the maize prices, the FRA Act will need to be amended," she said. "The enactment of the new agricultural marketing Act which among other things will establish an Agricultural Marketing Council would re-enforce this measure.

Maintaining government commitment to budget allocation to FRA has been a challenge in the past; we expect that in keeping with the commitment to support deeper development of agriculture in 2013, this allocation will be adhered to."

And Chabu hailed the government for measures undertaken in the financial sector.

The government, in its quest to restore a culture of savings and investment, plans to remove tax on interest earned by individuals from savings and deposit accounts.

In the same vain, the government further plans to abolish the medical levy which is currently charged on interest earned on savings and deposit accounts, treasury bills, government bonds and other similar financial instruments.

Chabu commended government saying the measures would result in improved culture of saving and subsequently accelerate the savings mobilisations by commercial banks.

"As a savings bank, we are excited about this measure, it is a marketing tool for us now because we will be going out in the rural areas, wherever we have our presence, to encourage people that the government is actually encouraging savings and because of that our savings mobilisation in 2013 will even be accelerated because people will be saying there is a benefit when you save," Chabu said in an interview.

"The other thing which has interested us is the infrastructure development because financial inclusion rides on infrastructures such as road, rail and energy infrastructure."

He said with a good road and rail network, and sufficient and reliable power supply, banks would be encouraged to expand into rural areas.

Labels: CEPHAS CHABU, FRA, MINING, TAXATION, WINDFALL TAX, World Bank

posted by MrK @ 5:50 PM