Red metal price rebound on the London Metal Exchange – LME and economic pulse clawing back into the economy helped scale Zambia’s tax revenue collection to an outperformance of 43.0% above forecast. This was revealed in a treasury brief by the Ministry of Finance dated June 18. Tax revenues in the period under review were 43.0% above forecast at K26.5 billion supported by positive tax type performance namely income tax, value added tax, customs and excise duties in addition to insurance premiums.
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A MINING REBOUND SCALES TAX REVENUES
Of the total tax proceeds collected, income tax exceeded its target performance by 36.0% on account of increased provisional declaration and payments made key mining companies. Value added tax outperformed by 13.0% supported by a rebound economic induced uptick in volumes and value of imports, mainly in the mining sector. Customs and excise duty revenue types was the least outperformed at 4.0% above budget attributed to higher importation velocity of machinery and consumables in the mining sector. Insurance premiums were reported 30.0% stronger. Despite the exceptional import tax performance, export duty pace was slower by 61.0% due to reduced exports of taxable products.
DIGITAL PAYMENT EFFICIENCIES AND DIVIDEND SCALE NON TAX REVENUES
Non tax revenues exceeded target 132.0% leveraging-off more efficient digital payment solutions, dividend payments and toll fees. Rising copper prices and increasing mining production doubled mineral royalties.
Despite balance sheet vulnerabilities rising metal prices have continued to improve Zambia’s economic outlook through a better dollar flow projection which in-turn has altered the exchange and inflation rate outlook should the trajectory persist. The COVID19 pandemic still poses an immense threat to achievement of macroeconomic targets for 2021. Private sector pulse has continued to show signs of manufacturing recovery after crossing the 50 mark which has eluded the Southern African nation for 26 months. The red metal producer recorded its first expansion in April at a Purchasing Managers Index – PMI of 50.1 which slid back into contraction in May at 49.7.
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