Zambia’s fiscal deficit will exceed the targeted 4.6 percent 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 per tonne from about $6,780 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 percent from 20 percent, 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 to 2.3 billion kwacha ($310 million),” Masiye told Reuters.
Zambia set the royalty tax rate for open cast and underground mining at 9 percent on Monday, rowing back from earlier plans to charge as much as 20 percent.
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.
($1 = 7.4300 Zambian kwachas) (Reporting by Chris Mfula; Editing by James Macharia)