03 SEPT - 17 SEPT

Zambian Business Times - - FINANCIAL MARKETS -

Just when the mar­kets were ex­pect­ing sup­port from in­creased kwacha demand to pay min­ing taxes, tax au­thor­i­ties ( ZRA) just paid out re­funds in VAT in ex­cess of K385mil­lion against the odds. This then meant that the usual dol­lar con­ver­sions to kwacha were re­placed by kwacha VAT re­funds that were used to ab­sorb tax obli­ga­tions. This gave lit­tle sup­port to the lo­cal unit which would have ide­ally helped re­verse some losses to cush­ion pres­sure from the risk off en­vi­ron­ment. How­ever, weak­ness in the kwacha against the dol­lar doesn’t make its ex­change rate to the rand any bet­ter as the dol­lar and ap­pre­ci­ated af­ter the South African govern­ment dropped the land ap­pro­pri­a­tion law which saw the SA lo­cal unit gain to lev­els of ZAR13.89/USD from last week’s highs of ZAR14.28/USD. The rand can never be trusted be­cause it had then pushed back to ZAR14.39/USD lev­els. This makes im­port in­fla­tion risk high for Zam­bia whose trade bas­ket (33%) com­prises SA goods. We can­not rule out price volatil­ity that could fur­ther slow pri­vate sec­tor pulse as mea­sured by Pur­chas­ing Man­agers In­dex – PMI for Au­gust.

Mutisunge Zulu is an Econ­o­mist and Fi­nance Ex­pert and cur­rently Na­tional Sec­re­tary for the Eco­nom­ics As­so­ci­a­tion of Zam­bia. PAGE 6

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