Country to repay VAT to mining companies

July 8, 2016 11:47 AM

Yav also said the government agreed at a cabinet meeting on Thursday to suspend future VAT for the companies and the measure awaited the prime minister's signature.

The KCD open pit gold mine at the Kibali mining site in northeast Democratic Republic of Congo, May 1, 2014.

Congo will pay some $700 million in value-added tax reimbursements owed to mining companies and suspend VAT on their imports, the finance minister said on Friday. The government suspended the reimbursements in April, seeking to shore up the franc currency, but Finance Minister Henri Yav Mulang told Reuters he has instructed the central bank to begin the repayments.

After years of stability, the franc has depreciated 6.7 percent on the official market this year and 9.4 percent on the parallel market, reflecting a slowdown in the mining and oil sectors.

Democratic Republic of Congo is Africa's largest copper producer but mining companies have laid off thousands of workers in the past year because of falling global commodities prices. They have lobbied the government to restart the payments.

"I already instructed the Central Bank to begin to pay in successive tranches," Finance Minister Henry Yav Mulang told Reuters. He did not say exactly when the payments would begin.

The pace of reimbursement will depend on the levels of government reserves and exchange rate pressures, Yav added. Mine operators say they have already received assurances that repayments would begin and are sceptical about the government's promises.

Congo's economy depends on the mining sector, which includes investors like Glencore, Ivanhoe Mines and Randgold Resources. The commodity price slump led the government to slash its 2016 budget by 22 percent and growth projections from 9 percent to 5.3 percent..