Zambia will lose about $200 million in revenue by suspending some fuel taxes to cushion the impact of the Iran war on households and businesses, Finance Minister Situmbeko Musokotwane said on Tuesday.
Zambia last month approved the zero-rating of Value Added Tax and suspended excise duty on petrol and diesel imports for three months starting April 1, measures aimed at mitigating rising global energy prices triggered by the war.
Speaking at the International Monetary Fund (IMF)-World Bank Spring Meetings in Washington, Musokotwane said the most immediate risk facing many African economies over the next 12 months was a possible energy crisis arising from the conflict in the Middle East.
He said the conflict could intensify inflationary pressures, raise production costs, and place additional strain on already constrained fiscal positions across many African nations, according to a statement released by Zambia’s Finance Ministry.
While support from international institutions such as the IMF would be welcome, Musokotwane said African governments must also pursue domestic reforms to improve their resilience and strengthen the quality of public spending.
Zambia is one of many African countries hard-hit by surging global energy costs.
–Reuters–
