February 9, 2004

World Bank puts conditions to supporting 2004 budget

World Bank puts conditions to supporting 2004 budget

According to World Bank representative, Ohene Nyanin, it was very difficult for the World Bank to support the budget until Zambia got back on the IMF programme. Commenting on the 2004 national budget, Nyanin said between now and June it was very difficult due to the budget, which was 36.5 per cent donor dependent unless Zambia got back on the International Monetary Fund's Poverty Reduction and Growth Facility (PRGF). He said funding to the budget depended on results that the IMF team would find in April when they would come to evaluate the Staff Monitored Programme. He also mentioned that the World Bank hoped the painful measures put on Zambians would bring about gains that would resolve economic challenges affecting the nation. "We would hope the country's getting back on track is achieved so that we can move to the base case and the World Bank can release US $100 million support for four years," he said. As he furthermore stressed, unless Zambia got strict with fiscal discipline and got back on the IMF programme the vision in the budget would not be realised.

In the meantime, finance and national planning minister Ng'andu Magande has justified the increase in the Pay As You Earn tax (PAYE) saying it was the major source of state revenue. Zambia Association of Manufacturers' (ZAM) chairperson Mark O'Donnell however emphasised that it was rather very disappointing since personal taxes had gone up because that move would affect the entire middle class. He said whereas relief to workers was good, increasing personal taxes to as high as 40 per cent would substantially reduce the purchasing power. O'Donnell said the projection of 3.5 per cent growth of the Gross Domestic Programme (GDP) confirms that there will be little progress in the economy and added that he did not see any job creation in the budget. (The Post, Lusaka)


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