By BUUMBA CHIMBULU
THE outbreak of COVID-19 has lowered Zambia’s economic growth for this year to two percent from the projected 3.2 percent while copper export earnings are expected to decline substantially by more than US$1 billion in 2020 if the situation persists.
This is despite the anticipated significant recovery in the agricultural sector.
The mining, manufacturing, tourism, construction as well as wholesale and retail trade sectors were projected to slow down on account of the pandemic, said Finance Minister, Bwalya Ng’andu.
Dr Ng’andu said copper prices had declined by 23 percent to US$4,754 per metric tonne as at 25th March, 2020 from US$6,165 per metric tonne in January 2020.
The Minister said yesterday in Lusaka at a press conference that the down ward forecast represented a reduction of about US$1,400 per tonne.
“Consequently, copper export earnings are expected to decline substantially by more than US$1 billion in 2020 if the situation persists. It follows, therefore, that mineral royalty tax collection will decline,” Dr Ng’andu said.
Dr Ng’andu said revenues under the 2020 budget were projected to be lower on account of the slowdown in economic activity.
He said collections under Value Added Tax, customs duties, income tax and mineral royalty were expected to decline.
The Minister said in February 2020 for example, revenue and grants collections were recorded at K4.6 billion, which was four percent below the target.
“More particularly, collection from mining company tax and overall VAT were below target by 32 and 13 percent, respectively.
Revenue collected in March 2020, thus far, stands at K2.7 billion against the target of K4.5 billion. This trend could continue if the pandemic persists,” he said.
Dr Ng’andu said on the expenditure side, the depreciation of the Kwacha against major currencies was resulting in higher debt service than programmed.
Further, he said, expenditures were also increasing to respond to the pandemic.
“COVID-19 has disrupted international trade in terms of both volumes and commodity prices. Collections of trade taxes are expected to be lower than projected in the first quarter of the year and most likely, beyond.
“There is also disruption to cross border supply chains given Zambia’s close trading relations in the region. This will have a significant negative impact on small and medium scale businesses,” he said.
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