Zambia will give up about $200 million in tax revenue over a three-month period to ease pressure on consumers and businesses affected by rising global oil prices linked to the war in Iran and disruptions in the Strait of Hormuz, Finance Minister Situmbeko Musokotwane said on Tuesday.
He said the measure will involve suspending excise duties and applying a zero-rated value-added tax (VAT) on petroleum products from April 1 to June 30.
Musokotwane made the remarks while discussing Zambia’s response to emerging global economic challenges driven by the conflict at the ongoing IMF and World Bank Spring Meetings in Washington, DC.
He also urged African countries to adopt broader and more strategic fiscal policies, saying governments should move beyond repeatedly managing shocks and instead use policy to boost productivity, improve energy security, and transform their economies.
He added that countries with higher production, greater diversification, and more competitive trade are better able to withstand shocks without falling into repeated crises.
Musokotwane warned that one of the key risks facing African economies over the next year is a potential energy crisis stemming from tensions in the Gulf region, which could worsen inflation, increase production costs, and strain public finances.
While acknowledging that support from institutions such as the IMF may be necessary, he emphasized that African governments must also pursue domestic reforms to strengthen resilience and improve the effectiveness of public spending.
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