Zambia’s finance minister, Margaret Mwanakatwe said the country will introduce new mining duties and increase royalties to help bring down mounting debt. Mwanakatwe, who delivered a $7.1 billion dollar budget in parliament, pledged to reduce debt and trim the fiscal deficit to 6.5 percent of Gross Domestic Product (GDP) in 2019 from 7.4 percent in 2018.
The economy of Zambia, Africa’s second highest copper producer, was expected to grow by at least 4 percent in 2019.
Outside parliament, police flanked around 100 demonstrators wearing black t-shirts with “Zambia Demands Accountability” written on them. One of the protest organisers, Laura Miti said “we are tired of hearing about scandal after scandal concerning the misuse of our national resources”. Concerns about the country’s rising debt, accusations of additional hidden borrowing, and of government corruption has discouraged investors and western donors.
Britain and Finland froze funding to Zambia in September 2018 on suspicion that $4 million they channeled into a social welfare scheme had been misused. The International Monetary Fund (IMF) has also put talk of an aid package on hold due to the country’s unsustainable debts.
To address the country’s mounting debt, a new 15 percent export duty on precious metals, including gold and gemstones, will be introduced, while copper and cobalt concentrate imports will incur a new 5 percent levy.
Mwanakatwe said “as mineral resources are a depleting resource, it is vital to structure an effective fiscal regime for the mining sector to ensure that Zambians benefit from the mineral wealth our country is blessed with”.
The tax hikes will go down badly with mining companies such as First Quantum, Glencore, and Vedanta Resources, which have frequently clashed with the Zambian government over rising operating costs.