LUSAKA – Zambia’s fiscal deficit will exceed the targeted 4.6% of gross domestic product in 2015 due to weaker copper prices and changes to the mining tax regime, a senior Treasury official said on Friday.
Mike Masiye, the director of budget in the ministry of finance, said copper prices had collapsed to around $6 000/t from about $6 780/t when the budget was formulated.
Africa’s second-largest copper producer would also lose revenue after it changed the mining tax regime, slashing royalties for open pit mines by more than half to 9% from 20%, Masiye said.”The combination of the collapse of copper prices and the revenue losses due to the changes to mining tax adds up to about 2-billion to 2.3-billion kwacha ($310-million),” Masiye told Reuters.
Zambia set the royalty tax rate for opencast and underground mining at 9% on Monday, rowing back from earlier plans to charge as much as 20%.
The move came after some mining firms and Zambia’s chamber of mining warned of shaft closures, and the loss of about 12 000 jobs.