Identifier
Created
Classification
Origin
08LUSAKA918
2008-09-15 05:44:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Lusaka
Cable title:
ZAMBIA AUGUST 2008 ECONOMIC ROUNDUP
how-toVZCZCXRO2606 PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN DE RUEHLS #0918 2590544 ZNR UUUUU ZZH P 150544Z SEP 08 FM AMEMBASSY LUSAKA TO RUEHC/SECSTATE WASHDC PRIORITY 6264 RUCPDOC/DEPT OF COMMERCE WASHDC INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE RUEATRS/DEPT OF TREASURY WASHDC RUEHBJ/AMEMBASSY BEIJING 0140 RHMFISS/HQ USAFRICOM STUTTGART GE
UNCLAS LUSAKA 000918
DEPARTMENT FOR AF/S AND EEB/CBA - DENNIS WINSTEAD
COMMERCE FOR 4510/ITA/IEP/ANESA/OA
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ETRD EMIN EINV ECON ZA
SUBJECT: ZAMBIA AUGUST 2008 ECONOMIC ROUNDUP
REF: LUSAKA 302
UNCLAS LUSAKA 000918
DEPARTMENT FOR AF/S AND EEB/CBA - DENNIS WINSTEAD
COMMERCE FOR 4510/ITA/IEP/ANESA/OA
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ETRD EMIN EINV ECON ZA
SUBJECT: ZAMBIA AUGUST 2008 ECONOMIC ROUNDUP
REF: LUSAKA 302
1. (U) SUMMARY
-- Inflation Increases in August
-- Government Holds Off on Windfall Tax
-- Zambian Companies Participate in Chinese Trade Fair
-- GRZ Develops Railway Infrastructure
-- Zambian Airways Faces Economic Problems
Inflation Increases in August
2. (U) Year-on-year inflation continued its increase in August 2008,
rising to 13.2 percent (from 12.6 percent in July). The Bank of
Zambia attributed the rise to high fuel, transportation, and food
prices. This upward movement makes it increasingly unlikely that
the Zambian Government (GRZ) will achieve its inflation target of
seven percent by December 2008, as outlined in the 2008 national
budget.
Government Holds Off on Windfall Tax
3. (U) According to September 11 press reports, Secretary to the
Treasury Evans Chibiliti told the Parliamentary Committee on
Estimates that the GRZ had deferred the implementation of its new
windfall tax on the mining sector. He said the GRZ is reviewing the
tax, in coordination with the private sector. Industry experts
suggest that the windfall tax will be introduced eventually, but at
a reduced rate. This will come as some relief to mining companies,
who have pointed to the windfall tax as the most onerous portion of
the GRZ's new mining tax regime. To date, only two companies
reportedly have made the windfall tax.
Zambian Companies Participate Chinese Trade Fair
4. (U) Over 90 Zambian companies registered with the Zambia
Development Agency to participate in the 12th China International
Fair for Investment and Trade (CIFIT) and Africa Commodities
Exhibition scheduled for September 8-11 in China. Their
participation points to widespread interest in expanding commercial
ties to China within the private sector.
GRZ Develops Railway Infrastructure
5. (U) The GRZ signed a memorandum of understanding with China Rail
Engineering Corporation (CREC) to construct a 240-kilometer stretch
of railway that will link mining towns in the North-Western and
Copperbelt Provinces. This follows a GRZ decision to cancel its
railways development agreement with North-western Railway Company,
owned by former Vice President Enock Kavindele, which failed to make
progress over the past three years. CREC constructed the
Tanzania-Zambia Railways (Tazara) in 1978.
Zambian Airways Faces Economic Problems
6. (SBU) The GRZ is exploring ways to hold the privately-owned
Zambian Airways accountable for a USD 1.6 million debt to the
National Airport Corporation Limited (NACL),consisting primarily of
landing fees and passenger taxes. Zambian Airways' chief executive
has expressed concerns to emboff of rising fuel costs, disappearing
profit margins, and high interest rates. The GRZ publicly announced
that it will seek a solution that will hold Zambian Airways
accountable for the liability, without causing insolvency. Business
organization representatives have voiced their concern and called
for GRZ leniency on the airline, which they argue to be integral to
Zambia's economic growth by offering increased competition in the
transportation sector.
KOPLOVSKY
DEPARTMENT FOR AF/S AND EEB/CBA - DENNIS WINSTEAD
COMMERCE FOR 4510/ITA/IEP/ANESA/OA
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ETRD EMIN EINV ECON ZA
SUBJECT: ZAMBIA AUGUST 2008 ECONOMIC ROUNDUP
REF: LUSAKA 302
1. (U) SUMMARY
-- Inflation Increases in August
-- Government Holds Off on Windfall Tax
-- Zambian Companies Participate in Chinese Trade Fair
-- GRZ Develops Railway Infrastructure
-- Zambian Airways Faces Economic Problems
Inflation Increases in August
2. (U) Year-on-year inflation continued its increase in August 2008,
rising to 13.2 percent (from 12.6 percent in July). The Bank of
Zambia attributed the rise to high fuel, transportation, and food
prices. This upward movement makes it increasingly unlikely that
the Zambian Government (GRZ) will achieve its inflation target of
seven percent by December 2008, as outlined in the 2008 national
budget.
Government Holds Off on Windfall Tax
3. (U) According to September 11 press reports, Secretary to the
Treasury Evans Chibiliti told the Parliamentary Committee on
Estimates that the GRZ had deferred the implementation of its new
windfall tax on the mining sector. He said the GRZ is reviewing the
tax, in coordination with the private sector. Industry experts
suggest that the windfall tax will be introduced eventually, but at
a reduced rate. This will come as some relief to mining companies,
who have pointed to the windfall tax as the most onerous portion of
the GRZ's new mining tax regime. To date, only two companies
reportedly have made the windfall tax.
Zambian Companies Participate Chinese Trade Fair
4. (U) Over 90 Zambian companies registered with the Zambia
Development Agency to participate in the 12th China International
Fair for Investment and Trade (CIFIT) and Africa Commodities
Exhibition scheduled for September 8-11 in China. Their
participation points to widespread interest in expanding commercial
ties to China within the private sector.
GRZ Develops Railway Infrastructure
5. (U) The GRZ signed a memorandum of understanding with China Rail
Engineering Corporation (CREC) to construct a 240-kilometer stretch
of railway that will link mining towns in the North-Western and
Copperbelt Provinces. This follows a GRZ decision to cancel its
railways development agreement with North-western Railway Company,
owned by former Vice President Enock Kavindele, which failed to make
progress over the past three years. CREC constructed the
Tanzania-Zambia Railways (Tazara) in 1978.
Zambian Airways Faces Economic Problems
6. (SBU) The GRZ is exploring ways to hold the privately-owned
Zambian Airways accountable for a USD 1.6 million debt to the
National Airport Corporation Limited (NACL),consisting primarily of
landing fees and passenger taxes. Zambian Airways' chief executive
has expressed concerns to emboff of rising fuel costs, disappearing
profit margins, and high interest rates. The GRZ publicly announced
that it will seek a solution that will hold Zambian Airways
accountable for the liability, without causing insolvency. Business
organization representatives have voiced their concern and called
for GRZ leniency on the airline, which they argue to be integral to
Zambia's economic growth by offering increased competition in the
transportation sector.
KOPLOVSKY