Zambian president promises to cut deficit, review mining policies

* New government aims to cut deficit, revive growth

* President Hichilema says 'decisive action' needed

* Key mining sector welcomes market-friendly message (Updates international debt figure with latest figure from a report from the ministry or finance)

LUSAKA, Sept 10 (Reuters) - Zambian President Hakainde Hichilema said on Friday his new government would implement policies to reduce the fiscal deficit, restore economic growth and review mining policies.

In his first address to a new session of parliament since his election in August, Hichilema said officials would also review agricultural policies, revise electricity prices and reform state power firm Zesco.

Last November Africa's second-biggest copper producer became the first country on the continent to default on its sovereign debt during the pandemic, after failing to keep up with payments on its nearly $13 billion of international debt.

"Rebuilding our economy is top on our agenda. We will implement policies to address the fiscal deficit while ensuring that confidence is restored in the markets," Hichilema said.

"We have indeed inherited an economy that is in dire straits and requires bold and decisive action to be taken," he said, adding that his government was committed to halting the accumulation of expensive public debt.

Zambia's external debt includes about $3 billion in Eurobonds, $3.5 billion in bilateral debt, $2.1 billion owed to multilateral agencies and $2.9 billion in commercial bank debt.

Zambia also owes mining companies more than $1.5 billion in value-added tax (VAT) refunds, an issue that soured relations between the government and the mining sector.

The VAT refunds are the top priority for the industry, said Zambia's Chamber of Mines CEO Godwin Beene, who represents mining companies including First Quantum Minerals' Kansanshi Mining and Barrick Gold's Lumwana Mining.


Hichilema's market-friendly stance will attract new investment into Zambia's mining sector and help boost the country's copper production at a propitious time of near record-high copper prices, Beene said.

"This election was a game-changer for the industry," he told Reuters.

Hichilema's predecessor, Edgar Lungu, had pushed for greater state ownership of mines. State mining investment company ZCCM-IH took on $1.5 billion in debt in January to take over Glencore's majority stake in the Mopani copper mine.

The previous government was looking for an investor to fund the mine's expansion, which would boost output from 34,000 tonnes of copper a year to 150,000 tonnes.

Zambia as a whole hopes to increase its annual copper output to 2 million tonnes by 2026, new finance minister Situmbeko Musokotwane said last month. The country produced 882,000 tonnes last year.

Hitting that target will require significant investment in Mopani and other mines across Zambia, as well as in exploration.
Reporting by Chris Mfula; Additional reporting by Helen Reid; Writing by Alexander Winning and MacDonald Dzirutwe; Editing by Edmund Blair and Gareth Jones

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.