Finance and National Planning Minister Dr Situmbeko Musokotwane has clarified that Zambia’s move to accept part of mining tax payments in the Chinese yuan (RMB) is a strategic measure aimed at reducing costs associated with servicing Zambia’s debt to China.
Addressing the press in Lusaka Tuesday, Dr. Musokotwane has noted that most of the loans contracted from China are denominated in RMB, not US dollars, meaning repayments must be made in the same currency.
The minister says allowing part of the taxes to be paid directly in RMB helps the government avoid currency conversion costs that arise when changing dollars into yuan, including bank charges, commissions, and fees.
He has stressed that savings made from reduced conversion costs can be redirected to critical public needs such as health, education and social services.
Dr. Musokotwane has added that the arrangement is based on prevailing economic circumstances and may be adjusted in future if conditions change, emphasising that the policy is guided by prudence and efficient management of public resources.
Meanwhile, Bank of Zambia Governor Dr. Denny Kalyalya says the inclusion of the Chinese renminbi (RMB) in Zambia’s reserves and tax payments framework is not new, noting that the currency has long formed part of the country’s reserve basket.
He says many countries, not only Zambia, hold RMB as reserves, but these are often reported in US dollar terms.
Dr Kalyalya hss explained that the current arrangement simply increases the proportion of RMB, which last year accounted for about 1.3 percent of Zambia’s reserves, in line with the country’s liabilities to China.
-Diamond TV