Finance Minister Dr Bwalya Ng’andu says mining companies should not worry about getting their VAT Refunds because he understands that businesses need liquidity to do their work.
And Dr Ng’andu says he deliberately left direct taxes untouched in the 2020 budget in order to preserve people’s incomes.
Meanwhile, Dr Ng’andu says he appreciates the sympathy from Zambians for heading the most stressful ministry.
Speaking when he officiated at the KPMG Zambia discussion forum on the 2020 national budget, Monday evening, Dr Ng’andu promised to pay mining companies their VAT Refunds.
“Delayed refund of VAT deprives business of the liquidity that it needs to do its work. So I hope that I am not taking any money from the mining companies when they import their equipment, I don’t want their VAT. So they don’t have to worry about me giving back to them and I hope that sooner than later, we will have a conversation about how we can dismantle their own outstanding VAT Refund over a period of time,” Dr Ng’andu said.
“The real thing that has to be dealt with is the problem of debt because debt servicing requirements are depriving the economy of the resources. And so what we need to do is begin to reallocate resources to the productive sector. It’s going to be a gradual process.”
Dr Ng’andu said the 2020 budget tried to do as little harm as possible to citizens by keeping VAT untouched.
“The approach that we took in preparing this budget was “do no harm” because the fiscal space to do exciting things wasn’t not there. So we were guided by the philosophy of trying to do no harm as possible. And because of that, you noticed that we did not tinker around with direct tax. Not even VAT rate was tinkered around with. We left things where they were so as to preserve your income. And I think that’s a good thing given the situation that we are in and the tight fiscal space that I have,” Dr Ng’andu said.
He said government would also focus on dismantling local debt whilst mobilizing resources to clear foreign debt.
“The greatest temptation for any Minister of Finance who wants to stop being minister of that finance is to increase tax. But I think that is a positive take from this budget. The other thing that we did was to stress the need to put liquidity back into the economy. The challenge that we have is that we have a large deficit but at the same time, we have low liquidity level and those two don’t work together. But I think in our case, most of the debt servicing that we have done has been to address the external debt servicing which in essence deprives the economy [of] what we need. So we are trying to correct that by stressing emphasis on putting more liquidity in the economy by dismantling that mountain of debt owed to the private sector, to the small scale entrepreneurs and other providers of goods and services to government,” Dr Ng’andu said.
Meanwhile, Dr Ng’andu said he valued the sympathy that stakeholders were showing him for heading the most stressful ministry.
“As you know, I was referred to as a Minister of Finance without Finance. Some have given me even more descriptive [names] and refer to me as a witch-doctor. But I do value the sympathy that all of you have for me and the trust that I have which is very good because that means is that there are not even people who want this job,” said Dr Ng’andu.