.CHIKWANDA

By MAIMBOLWA MULIKELELA? –

THE Government has hinted at introducing stringent measures to limit public expenditures on non-critical areas to help offset the loss of revenue through the newly proposed mining tax changes.
Finance Minister Alexander Chikwanda said the Government will strive to ensure that it maintained critical expenditure in areas such as health, education and infrastructure in view of the revision in the 2015 budget.
In an interview in Washington DC, Mr Chikwanda said the Government would strive to ensure sure that it maintained critical expenditures in areas such as health, education and infrastructure.
“But clearly some adjustments will have to be made. Once Cabinet deliberates on these issues the public will be informed,” he said at the weekend ahead of Cabinet approval of the proposed changes on Monday.
Mr Chikwanda said that, clearly, the external environment had changed significantly since 2015 budget was presented.
He said the commodity prices particularly that of copper have fallen significantly and that the Government was looking at how to respond to the shocks both in the mining sector and to the budget.
“We have also seen a drop in projected copper production.
This has been reflected in a drop in overall export earnings. Clearly this has implications on growth, but also on the budget revenues,” Mr Chikwanda said.
Mr Chikwanda said as indicated, external developments dictated that the Government would have to make adjustments, although the focus would be on maintaining the thrust of expenditures that address poverty and build the capacity of the economy to create jobs and support the private sector.
“This issue can best be answered after the Cabinet meeting looking at this issue,” he said.
On the uniform mineral royalties, Mr Chikwanda said in principle, mining companies are lumbered with different cost structures depending on whether they are open pit or deep mining.
He said what fiscal policy tries to do was to get a balance between these two types of operations without jeopardising a level playing field and taking away the incentive for mining companies to innovate to reduce their cost structure.
Mr Chikwanda highlighted on the issue of the Balance of Payment (BoP) on which he said was important to be clear.
He said Zambia continued to engage with the International Monetary Fund (IMF) for policy advice under Article 4 consultations, the last having been at the end of last month.