IMF welcomes review of mining tax regime

THE International Monetary Fund (IMF) has welcomed President Lungu’s directive to review the mining tax regime that came into effect at the beginning of the year.
And, the IMF says the Bank of Zambia (BOZ)’s recent action to increase reserve requirements for banks is helping to stabilise the local currency.
This is contained in a statement issued by an IMF team led by Tsidi Tsikata which visited Zambia from March 19 to 31 to complete discussions for the 2015 Article IV consultation.
This followed initial discussions in December last year prior to Zambia’s recent Presidential election.
“We hope resolution of the mining impasse will result in a transparent system applicable to all mines rather than mine-by-mine agreements that would likely entail the government foregoing substantial revenues to keep individual mines in operation,” Mr Tsikata said.
He said while pressures on the economy have grown, the challenges are not insurmountable saying resolute actions to contain the budget deficit, resolve the mining tax disputes and foster policy coherence and stability would go a long way toward boosting investor confidence and unlocking the country’s high growth potential.
Mr Tsikata said the IMF staff remains committed to working with the authorities on the issues.
Meanwhile, IMF says BOZ’s recent action to increase the reserve requirements for banks is helping to stabilise the Kwacha and the monetary tightening would be more effective if accompanied by fiscal tightening.
The mission also welcomed the recent easing of documentation requirements for VAT refund claims of exporters and urges the authorities to resolve the large stock of outstanding claims.
The team met with Finance Minister Alexander Chikwanda, BOZ Governor Denny Kalyalya, and other senior government officials as well as representatives of the private sector and development partners.
The mission has also thanked the authorities for their co-operation and for the open and constructive discussions.
The IMF’s executive board is tentatively scheduled to discuss the staff report in May.

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