Thursday, 31 July 2008
High commidity prices, especially copper, have totally changed the outlook for the Zambian Kwatcha and indeed the whole economy. At its peak in the 1970s, the country produced 700,000 tonnes of copper. 2008 output should be back to 650,000 tonnes having almost declined to nothing. New production coming on stream will see production rise to over 1,000,000 tonnes in 2010. Another piece of good news is that Zambia is diversifying this narrow economic base. Zambia’s first two uranium mines begin production from 2009.
In 2008, the Government introduced mining tax reform that which will greratly improve the fiscal surplus (less offshore transfer pricing). Added to a trade surplus and a balance of payments surplus, Zambia’s currency, the Kwatcha, is likely to rise, especially as foreign exchange reserves equate to 12.5% of GDP of US$12 billion.