Zambia govt set to unveil pro-poor budget

Zambian finance minister Alexander Chikwanda is expected to unveil a pro-poor budget on Friday, reflecting the shift in political priorities in Africa's biggest copper producer since opposition leader Michael Sata's September election upset.

Chikwanda is expected to present a budget of about 25 trillion Zambian kwacha for 2012, sources close to the budget-making told Reuters, up from slightly more than 20 trillion kwacha in 2011.

One would expect a pro-poor budget because that is what the President talked about during his inauguration and during the official opening of parliament, said Oliver Saasa of the Economics Association of Zambia, a Lusaka think-tank.

This is not likely to be about increased expenditure but better targeting of the poor as the government can only work within the available resources in the budget, he added.

Sata unseated incumbent Rupiah Banda with promises to lower taxes and spread more widely the benefits of annual economic growth that has averaged 6 percent over the last five years.

The government is expected to spend heavily on rural infrastructure such as roads in order to open up remote areas to development. A large chunk of the budget is also likely to be allocated to social services such as health and education.

At his opening of parliament, Sata said he owed the youth who voted for him jobs.

The finance minister is likely to announce measures that create opportunities to earn income. He may also introduce other incentives for employment creation, Saasa said.

Chikwanda is unlikely to re-introduce a mining windfall tax despite public outcry at the meagre revenues from the sector, which accounts for three-quarters of export earnings but only contributes about 2 percent of total tax receipts.

The government also realizes that squeezing the industry through higher taxes could lead to the closure of companies and job losses at a time when job creation is on top of its agenda, analysts say.

Chikwanda is expected to raise the taxable income threshold in order to exempt thousands of lowly paid workers from paying tax, and expand a farmer subsidy programme.

He is also likely to shed light on the status of the previous government's plans to launch a debut $500 million euro bond which was initially meant to have happened last month.