Zambia hikes mining taxes in 2019 budget to rein in debt

28th September 2018 By: Reuters

LUSAKA – Zambia will introduce new mining duties and increase royalties to help bring down mounting debt and narrow its fiscal deficit, Finance Minister Margaret Mwanakatwe said on Friday.

Presenting a 86.8-billion kwacha ($7.10-billion) budget, Mwanakatwe said Zambia planned to trim its fiscal deficit to 6.5% of gross domestic product (GDP) in 2019 from 7.4% this year.

The economy of Africa's No.2 copper producer was expected to grow at least 4% in 2019, around the same level as a forecast for this year, she said.

Mwanakatwe announced plans to increase the country's sliding scale for royalties of 3% to 9% by 1.5 percentage points. The scale is adjusted so royalties are paid at higher levels as commodity prices climb and are reduced as prices fall.

A new 15% export duty on precious metals, including gold and gemstones, will be introduced, while copper and cobalt concentrate imports will incur a new 5% levy.

"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," Mwanakatwe said.