Zambia Seen Considering Higher Mine Taxes to Trim Budget Gap – by Matthew Hill and Taonga Clifford Mitimingi (Bloomberg News – September 5, 2018)

https://www.bloomberg.com/

Zambia plans to trim its fiscal deficit next year even as Africa’s second-biggest copper producer boosts spending. It may be considering raising mine taxes to achieve that, according to analysts.

The Finance Ministry is targeting a budget shortfall of 6.5 percent of gross domestic product next year, compared to 7.4 percent this year, according to a medium-term expenditure plan that sets its fiscal course until 2021. At the same time, it forecasts mineral-royalty and mine-profit tax revenue increasing by about a quarter, as copper output grows 3.7 percent and prices remain flat.

That suggests an increase in rates for both profit tax and royalties for companies including Glencore Plc, First Quantum Minerals Ltd. and Barrick Gold Corp., said Mark Bohlund, an Africa economist with Bloomberg.

“The sharp increase in mining royalties and mining corporation income tax appear to be based on a change in the taxation regime,” he said in reply to emailed questions. A Finance Ministry spokesman didn’t immediately respond to a request for comment.

Finance Minister Margaret Mwanakatwe is due to present the 2019 budget to lawmakers this month. She’s trying to allay fears around Zambia’s external debt that grew to $9.4 billion at the end of June, almost double the amount at the end of 2014, and get the International Monetary Fund to resume talks over a potential $1.3 billion bailout.

For the rest of this article: https://www.bloomberg.com/news/articles/2018-09-05/zambia-to-trim-budget-shortfall-in-2019-even-as-spending-jumps

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