Zambia's President Promised To Cut The Deficit And Review Mining Policy; Mining Rules Face Big Changes

Zambian President Hakainde Hichilema said on Friday his new government would take steps to reduce the fiscal deficit, restore economic growth and review mining policy.

Hichilema addressed the new session of parliament for the first time since his election in August.

Mr Hichilema said officials would also review agricultural policy, revise electricity prices and reform Zesco, the state electricity company.

In November, Zambia became the first country on the continent to default on its sovereign debt during the pandemic, after it missed payments on more than $12bn of international debt. Zambia is Africa's second largest copper producer.

"Rebuilding our economy is number one on our agenda," hichilema said. We will implement policies to address the fiscal deficit while ensuring that market confidence is restored." "We do inherit an economy in distress that requires bold and decisive action."

Hichilema says his government is committed to stopping the accumulation of costly public debt.

Zambia's external debt includes approximately us $3 billion in Eurobonds, US $3.5 billion in bilateral debt, US $2.1 billion in multilateral agency debt and US $2.9 billion in commercial bank debt.

Zambia also owes mining companies more than $1.5 billion in VAT rebates, an issue that has soured relations between the government and the mining sector.

Godwin Beene, chief executive of Zambia's Chamber of Mines, says VAT refunds are a top priority for the mining industry. He represents mining companies including Kansanshi Mining of First Quantum Minerals and Lumwana Mining of Barrick Gold.

'Game changer' for Mining companies

Beene said Hilema's market-friendly stance would attract new investment into Zambia's mining sector and boost the country's copper production at a favorable time when prices are near record highs.

"This election is a game changer for the industry," Beene told Reuters.

President Edgar Lungu, Mr Hichilema's predecessor, pushed state-owned companies to expand their ownership of mines. Zccm-ih, the state-owned mining investment company, borrowed $1.5bn in January to buy a majority stake in Glencore's Mopani copper mine.

The previous government was looking for investors to fund the mine's expansion, which would have boosted copper production from 34,000 tonnes to 150,000 tonnes a year.

Situmbeko Musokotwane, Zambia's new finance minister, said last month that the country as a whole wanted to increase copper production to 2m tonnes a year by 2026. The country produced 882,000 tons last year.

实现这一目标将需要大量投资in Mopani and other mines throughout Zambia, as well as in exploration areas.