S&P Global Ratings has raised its long-term foreign currency sovereign credit rating on Zambia to ‘CCC+’ from ‘SD’ (Selective Default).
The rating agency also raised the short-term foreign currency rating to ‘C’ from ‘SD’ and affirmed the local currency ratings at ‘CCC+/C’.
The outlook on both foreign and local currency ratings is stable.
This upgrade reflects the improved creditworthiness of the sovereign as negotiations with remaining commercial creditors reach an advanced stage.
According to S&P, Zambia has reached agreements with official and commercial creditors representing approximately 94% of the total USD 13.3 billion debt within the restructuring perimeter.
The agency notes that restructuring agreements on commercial debt representing less than 3% of the total external debt stock are currently pending.
The improved rating is further supported by favorable market conditions in 2025, specifically a ramp-up in copper production which bolsters the country’s terms of trade dynamics.
Copper production increased by 17.8% year-on-year in the first half of 2025.
S&P highlights that despite ongoing fiscal consolidation efforts, the upcoming 2026 general elections present a risk to policy continuity.
The stable outlook balances gradually improving fiscal performance and increased availability of official support against risks from still-elevated near-term borrowing requirements.
S&P Global Ratings states: “The upgrade reflects authorities’ recent steps to restructure remaining commercial debt. The higher rating better represents Zambia’s creditworthiness on a forward-looking basis.”
The report adds: “We understand the government is nearing completion of its offers to restructure loans to external creditors, primarily commercial banks. While some lenders could still become holdout creditors, the likelihood of related disruption is mitigated.”
Regarding the economic outlook, S&P forecasts that “Favorable market conditions in 2025 have seen a ramp-up in copper production. Our baseline assumptions include the improvement in mining sector regulations in recent years and rising investment supporting a steady increase in copper production.”
Zambia’s economy remains heavily reliant on the mining sector, with copper production accounting for about 14% of GDP, 70% of total export receipts, and 20%-25% of government revenue.
The government aims to boost annual copper output to 3 million tons by 2031 through significant planned investments.
S&P assumes copper prices will remain supportive, averaging USD 10,500 per metric ton for the remainder of 2025 and through the 2026-2028 period.
Following the severe drought in 2024, the economy is recovering, with real GDP growth projected at 5.2% in 2025 and 6.0% in 2026.
Inflation is forecast to moderate to an average of 13.8% in 2025 and further down to 9.0% in 2026.
Foreign exchange reserves were recorded at USD 5.2 billion at the end of September 2025, supported by disbursements from the IMF Extended Credit Facility and stronger export receipts.
The agency anticipates that net general government debt will moderate to 78.5% of GDP by the end of 2028, driven by gradual consolidation and improving nominal GDP growth.
