ZAMBIA'S KWACHA ENDED 2014 AMONG WORST PERFORMING CURRENCIES


Zambia’s kwacha ended 2014 as the worst performing African currency among a small basket of countries that are relatively liquid, as falling commodity prices take a toll on some of the continent’s big economies like South Africa and Nigeria.
The currency is starting the year on the back foot amid tax rows with mining houses on the new mining regime, a lower growth forecast and a pending election.
Trading within K6.35 / K6.36 level against the Dollar for most of the trading session, within the positive territory.
The kwacha lost its strength by over 13 percent
Despite this government is optimistic of a better performance in 2015.
Zambia has cut its 2014 growth forecast to 6 percent – still vulnerable to global standards – from a targeted 6.5 percent, citing various challenges.
The forecast for the next three years is 7 percent principally as a result of increased agriculture production, electricity generation, construction and growth in transport and communication but that may be hard to reach with falling copper prices, not to mention brewing rows with mining companies over the new taxes.
For the long-term, many desire of Government sustains and increase this growth trajectory to double digits in order to ensure greater impact on poverty reduction, particularly in peri-urban and rural areas.
Policy consistency was one major concern in the past year and looking forward many stakeholders will also want to invest in a country whose economy is growing so obviously and predicated investment policies.
Early January Minister of Finance Alexander Chikwanda said the government intended to resolve the issue of VAT refunds with mining companies and hoped to agree with them on new mining taxes, which 600 million dollars in VAT refunds owed to mining companies and will only repay the cash when companies produce import certificates from destination countries.
And as the country is due to hold a presidential election on Jan. 20 the tax issue may only be resolved after a new administration comes to power.
Investors are also watching how the elections go.

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