New Zambia’s Finance Minister, Bwalya Ng’andu, is seeking to mend fences with the country’s powerful mining industry in the face of calls from the IMF to shrink a hefty debt pile, said addressing budgetary issues would be his first challenge.
The 9% across-the-board tax on sales of goods and services, which was originally due to be introduced in April, would help rein in the external debt of Africa’s second largest copper producer, which hit $10.05 billion at the end of 2018, and a fiscal deficit running at 7.5% of gross domestic product.
But the government postponed it until September for further consultation, and Ng’andu said that deadline would now also be reviewed.
“We need to restore the fiscal health of the economy,” he said during his swearing-in ceremony. “We will look at whether it is prudent to implement …(the new tax) three quarters into the year.”
Zambia’s Chamber of Mines says the tax, combined with other levies imposed specifically on the industry, will stymie investment, push some producers into the red and lead to the loss of 100,000 tonnes of copper production this year.
Zambia’s dollar-denominated government bonds jumped after news of his appointment. The government is also embroiled in an ownership dispute over a copper mine with Mumbai-listed Vedanta, which has sparked concerns among international investors that it might nationalize some of the country’s natural resources.
Mark Bristow, CEO of Barrick Gold Corp, said the company looked forward to engaging with the new minister, adding it had already had a very constructive discussion with the minister of mines over the new taxes.