IMF Sees Zambia Economic Growth at 12-Year Low as Mining Hit

Zambia’s economy will expand at the slowest pace in 12 years in 2014 after mining production was hurt by technical shutdowns, according to the International Monetary Fund.

Zambia’s economy will grow by 5.5 percent this year, Tsidi Tsikata, who led an IMF team for an article IV consultation this month, said in an e-mailed statement late yesterday in Lusaka, the capital. That’s the slowest pace since 2002.

“Zambia’s growth potential remains high, but the medium-term outlook is clouded by domestic and external risks,” Tsikata said. “Lower world copper prices and the announced shift to a royalty only mining tax regime with high rates are likely to adversely affect the mining sector.”

Zambia’s parliament this week approved a law that more than triples royalties for some mines, prompting Barrick Gold Corp. to announce the closing of its Lumwana mine. Other operations may also cut production, adding further growth risks for the country that depends on copper exports for about 70 percent of its foreign-currency earnings.

Zambia is due to hold elections next month after Michael Sata died in October. His death sparked a bitter leadership battle in the ruling Patriotic Front party as well as the main opposition with factions of each party failing to agree on who should stand in the elections.

Zambia lost its place as Africa’s biggest copper producer to the Democratic Republic of Congo last year.

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