Bank of Zambia Governor Dr Denny Kalyalya says Zambia’s economy is projected to contract by 2.6 percent in 2020 from a projected 1.9 percent in 2019.

Dr Kalyalya said at a media briefing that this is the first contraction in real Gross Domestic Product in more than 20 years.

He said with the COVID-19 pandemic, the already challenged domestic macroeconomic environment has worsened adding that the significant reduction in consumer and investment spending due to the disruptions in business operations is expected to weigh on economic activity.

Dr Kalyalya said so far, the sectors known to be most adversely affected are construction, wholesale and trade, tourism, manufacturing, electricity as well as mining.

Meanwhile, Dr Kalyalya said the Central Bank has revised downwards the Monetary Policy rate by 255 points to 9.2 percent from 11.5 percent.

He said this is to mitigate the adverse impact of the COVID-19 on financial sector’s stability, economic activity and ultimately on people’s livelihoods.

Dr Kalyalya has explained that the cut also complements the other broader set of measures already announced by the Central Bank to mitigate the impact of COVID-19.

He said that although the path for inflation is higher than the February 2020 forecast, it is expected to trend towards the upper bound of the 6 to 8 percent medium-term target range at the end of the forecast horizon.

And on the depreciation of the local currency, Dr Kalyalya said the Kwacha, which had exhibited relative stability over the first two months of the year following significant tightening of monetary policy in November and December 2019, came under intense pressure in March.

He said this reflected the unresolved macroeconomic challenges associated with high debt service and debt levels, rising fiscal deficits as well as declining international reserves.

Dr Kalyalya said market attention to these was heightened by the publication of sovereign credit downgrade at this time.

He said the COVID-19 outbreak has since compounded these exchange rate pressures.

Dr Kalyalya said during the period, the Kwacha depreciated by 9.6% against the US dollar to a quarterly average of Kl5.18/US dollar.

He said with the mounting pressure in March, the Kwacha ended the quarter with a year-to-date rate of depreciation of 28.9% to K 18.1 1/US dollar.

Dr Kalyalya said to moderate exchange rate pressures, the Bank of Zambia provided support to the market and in addition, the Bank revised rules governing the operations of the interbank foreign exchange market to support its smooth functioning, strengthen market discipline, and provide a mechanism for addressing heightened volatility in the exchange rate in periods of stress.

MOPANI Copper Mines has been ordered to pay over K240 million tax liability to the Zambia Revenue Authority-ZRA for the years 2006 to 2010. Of the amount, over K140 million covers tax liabilities from 2008 to 2010 while K100 million caters for the years 2006 to 2008.

The order has been made by the Supreme Court in a 63-page Judgement. Chief Justice Ireen Mambilima, Supreme Court Judges Mumba Malila, and Nigel Mutuna handed down the judgment. The judgment is on the backdrop of the appeal filed in the Supreme Court by MOPANI, disputing the Tax Tribunal ruling of 2010.

In 2010 the Tax Tribunal passed a ruling in favour of ZRA, obligating MOPANI Copper Mines to pay the latter the tax liability. This was after the ZRA advanced the complaint before the tribunal when Mopani Copper Mines failed to settle the tax liability.

Meanwhile, the Government has proposed measures to Mopani Copper Mines, aimed at sustaining its operations. Finance Minister, Bwalya Ng’andu has disclosed this to journalists after his Ministerial delegation held a closed-door meeting with management at Mopani copper mines.

Flanked by Labour Minister, Joyce Simukoko, Mines Minister, Richard Musukwa and Copperbelt Province Minister, Japhen Mwakalombe, Dr. Ng’andu said it is now up to the mine management to engage Glencore.

Dr. Ng’andu explained that the government expects feedback from Glencore, the owners of Mopani Copper mines.

He said the government hopes the issue of Mopani mine will be concluded within the few coming weeks, in order to put the matter to rest.

And Mopani Copper Mines Board Chairperson, Moses Chilangwa said the mining firm is ready to listen to the government, as the two parties try to find a solution to the matter

The Development Bank of Zambia has announced the appointment of Dr. Samuel Mulenga Bwalya as its Managing Director (MD).

Dr. Bwalya has over 25 years of experience in development economics, economic management and international development, which spans across Nigeria, Ethiopia and Zambia.

He has conducted research in several fields of economics, political economy, taxation and tax administration systems, and on environment and natural resource management.

Prior to joining DBZ, Dr. Bwalya worked for the United Nations Development Programme (UNDP) Nigeria as Country Director and Resident Representative.

He also worked for UNDP Ethiopia as Country Director, as well as the Zambia Revenue Authority (ZRA) as Director for Corporate Planning and Research.

He holds a PhD Degree in Economics and Master of Science Degree in Economics from the University of Rhode Island and Addis Ababa University respectively, and a Bachelor of Arts Degree in Economics from the University of Zambia.

Commenting on Dr. Bwalya’s appointment, DBZ Board Chairperson Prof Pinalo Chifwanakeni said ‘We are confident that his leadership capabilities, coupled with his economic management and international development expertise, will enable the Bank to formulate and implement key transformative programs that will enhance its position as a development finance institution.”

Finance Minister Dr Bwalya Ng’andu has admitted that the 2020 national budget will need to be revised.

Dr Ng’andu said Covid-19 has caused a government financing gap of at least 20 billion Kwacha ($1.09 billion) to 29 billion Kwacha this year which accounts for as much 40% of planned revenue.

In an interview in Kitwe on Monday, Dr Ng’andu also admitted that Zambia was “over ambitious” with its borrowing.

He said Zambia is seeking to restructure its debt after years of “over-ambition” in borrowing to plug an infrastructure deficit.

Dr Ng’andu said Zambia has stopped taking on new commercial debt and is seeking to cancel some loans that it’s contracted but not yet received.

He said the country also aims to restructure loans already disbursed as the government strives to achieve debt sustainability that would allow it to tap emergency financing from the International Monetary he said.

He also referred to restructuring to describe what the government has so far called a “liability management exercise” of its external debt.

The Finance Ministry is seeking financial advisers for this process, which will include all of Zambia’s external debt.

“There was an over-ambition in terms of borrowing,” he said. When asked if the nation’s debt was unsustainable, Dr Ng’andu said “everybody knows that.” The Finance ministry knows that.”

He said the Ministry has written to lenders with which it had contracted debt, but not yet received the money, asking them to cancel or reduce the projects.

In February, he said the government could reduce the total $7 billion of contracted but undisbursed debt by about $5 billion.

Zambia is also planning to restructure loans it’s already received and in its external debt count, which totaled $11.2 billion at the end of last year including $3 billion in Eurobonds.

“The idea was to begin the process of restructuring — talking to the lenders with the view to restructure the loans,” Dr. Ng’andu said.

“We have gone in this process by seeking to get professional advisers on debt. There was a process which has been completed last week of assessing possible friends that can work with us in terms of helping us to restructure our debt.”