Fitch Upgrades Zambia’s Ratings


On September 19th 2014, the London-based rating agency Fitch Ratings has revised its outlook on Zambia’s Long-term foreign and local currency Issuer Default Ratings (IDR) from « Stable » to « Positive » and affirmed the IDR’s at ‘B’.

The issue ratings on Zambia’s senior unsecured foreign and local currency bonds have also been affirmed at ‘B’.

The Country Ceiling has been affirmed at ‘B+’ and the Short-term foreign currency IDR at ‘B’. 

According to a press release by the agency, the revision of the Outlook on Zambia’s IDRs reflects several key rating drivers.

The first one cited by the agency is a more positive outlook on Zambia’s public finances compared to October 2013, including a fiscal deficit contained at 2% of the country’s GDP in the first 6 months of 2014, even though the government’s target was 2.5% of the GDP.

The agency then mentions government policies, indicating that the business environment had not deteriorated as much as previously expected, and the likelihood of significant and adverse policy shifts had significantly reduced.

Fitch also forecasts growth to remain at « a robust 6%-7% in 2014-2016, benefiting from the government’s ambitious infrastructure investment programme, rising copper production and continued foreign direct investment (FDI) ». 

The main factors that could lead to a further upgrade are a continued progress on narrowing the budget deficit, a further improvement in the macroeconomic policy framework, an improvement in international reserves to reduce Zambia’s vulnerability to external shocks, and a well-implemented infrastructure investments.

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