By Ellen Hambuba and Report by Daisy Mulenga
Financial Economist BRIGHT CHIZONDE says the government’s decision to allow some mining companies to pay their tax obligations in Chinese currency is a progressive step.
Mr. CHIZONDE told ZNBC News that the move will help reduce the government’s cost of debt servicing.
He noted that Zambia’s gross international reserves are not entirely denominated in US dollars, despite being reported as such.
Mr. CHIZONDE said collecting taxes in Renminbi -RMB- will help stabilise the economy by increasing the proportion of reserves held in Chinese currency.
And Economist KELVIN CHISANGA said Zambia’s approach to settling some mining tax and debt obligations in Chinese currency could significantly reduce foreign exchange conversion losses.
Mr. CHISANGA explained that allowing transactions to be conducted directly in Chinese currency could save the government three to four percent, while investors could save up to five percent.
He added that these savings could free up resources for reinvestment, while the government could use exchange-rate savings to fund other budget priorities.
Another Economist LUBINDA HAABAZOKA described the move as a logical extension of government policy to secure foreign exchange from the mining sector.
He noted that mines were previously allowed to pay taxes in US dollars to strengthen foreign currency inflows and support macroeconomic stability.
Trade expert GILBERT NKAMBA said the decision will strengthen currency diversification and reduce Zambia’s over-reliance on the US dollar, especially as the country trades more actively with China than with the United States.
