Finance Minister Dr. Bwalya N’gandu has stated that the Zambian government budgeted income will fall short of target by at least K14.8 billion or 19.7 % [approximately 20%] of the approved 2020 budget, adding that the reduction by tax type will be determined as more information unfolds.
He also confirmed that the International Monetary Fund – IMF has projected that Zambia’s economy will shrink by a negative 2.6% in 2020 from the earlier projection of 3.6% amid to COVID -19.
Speaking when giving an update on the country’s economy on April 20, 2020 in Lusaka, the Minister of Finance announced that the economic adjustment due to COVID- 19 will further result in a severe drop in revenue.
Dr. Nga’ndu further said that this estimated impact does not include the revenue loss arising from the tax relief measures that were announced two weeks ago but are based entirely on the expected economic adjustments due to COVID-19.
“In our projections, we have assumed that the peak period for impact of the Corona Virus on revenues is April and May. If we further assume that the pandemic will be quenched by August 2020, we project that the negative impact on revenue will continue until December 2020,” He said
In addition, the Minister said projections suggest that the reduction in the price of copper on the London Metal Exchange – LME will continue until June resulting in a drop in mineral royalty and income tax payments from mining companies.
He said Pay As You Earn (PAYE) from the mining sector is also expected to fall as some contractors may lose their contracts going forward hence the scaling down of mining sector activities will lead to reduced engagement of foreign providers of management services and will affect Withholding tax receipts on management fees and consultancy.
Meanwhile, the scaling down of economic activities in the country is expected to cut across all sectors including manufacturing, transport, power generation and transmission, wholesale and retail trade, tourism and the hospitality industry in general, however, this will basically translate into a reduction in all tax and non-tax revenues among them PAYE, VAT, customs duty, excise duty, fuel levy, export duty, road user charges, fees and fines.
Zambia has so far witnessed disturbing developments as the virus has increased in terms of numbers of people confirmed as positive and also in terms of geographic spread. As at April 20, 2020, the country recorded 65 confirmed cases, 35 recoveries and sadly 3 deaths due to COVID- 19?
The globally rampaging corona virus is no longer confined to the capital city of Lusaka only, but has spread to other parts of the country which include Zambia’s mining and industrial hub region of the Copperbelt, Central province [Kabwe] and other parts of Lusaka province [Kafue].
