CSPR Cautions on Yuan Policy

Civil society backs move in principle but questions fiscal and risk safeguards

By Francis Maingaila ♥️ 

Lusaka, Zambia24 — (09 January 2026) -'

The Civil Society for Poverty Reduction (CSPR) has cautioned on the government’s decision to accept the Chinese Yuan for the settlement of mining taxes, saying it supports the move in principle but is concerned about what it described as weak fiscal, legal and risk safeguards in the policy announced by the Ministry of Finance and National Planning (MoFNP).

CSPR Executive Director Isabel Mukelabai told journalists in a statement that while currency diversification can support economic stability, such decisions must be backed by clear analysis and strong risk management.

Mukelabai acknowledged government’s justification for allowing four Chinese mining firms to pay mining taxes and royalties in Yuan to reduce conversion costs linked to Yuan-denominated loans and diversify foreign reserves.

She said CSPR welcomes the limited scope of the policy, as it applies only to mining taxes and royalties and does not affect other government revenues.

However, Mukelabai said critical details remain unclear, including whether Yuan tax revenues are ring-fenced for debt servicing and whether they will be sufficient to settle outstanding Yuan-denominated loans.

She said government should have provided projected Yuan revenues and quantified the expected savings from reduced currency conversions.

Mukelabai also questioned how the policy aligns with Zambia’s Debt Management Strategy and the Public Debt Management Act.

She noted that Zambia’s external debt and mineral exports are largely denominated in US dollars, raising concerns about potential currency mismatches.

Mukelabai further raised concern over the lack of clarity on risk management, including how Yuan tax payments will be valued and what exchange rates will apply.

She warned that without clear valuation rules and effective hedging, the policy could shift currency risk to the central bank and taxpayers.

Mukelabai called on government to clearly outline the Yuan tax settlement mechanism, including risk mitigation measures and oversight arrangements.

She also urged authorities to ensure the policy does not undermine competitiveness in the mining sector.

Mukelabai concluded by calling for transparency, including regular public reporting and parliamentary oversight of the multi-currency revenue system.

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