S&P RATES ZAMBIA'S ECONOMY STABLE

Mon, 28 Aug 2017 10:05:33 +0000

By Annie Zulu

THE upgrading of Zambia from negative to positive-with-a-stable-outlook of the economy by Standards and Poor (S&P) Global is an endorsement of the soundness of the policies being implemented by the government of President Edgar Chagwa Lungu, says Finance Minister Felix Mutati.

Mr Mutati said the rating has revised Zambia’s outlook on the “B” long-term foreign and local currency sovereign ratings to stable from negative.

He noted that at the same time, the “B” long-term and “B” short-term sovereigns have been affirmed.

“This development rides on the basis of the critical reforms which we have embarked on as a country under the Economic Stabilisation and Growth Programme to implement fiscal consolidation, remove subsidies, reform the energy sector, and embark of diversification of the economy through agriculture development and industrialisation,

Mr Mutati said Zambia will work diligently to ensure that the confidence of the people and that of investors was not taken for granted.”  He noted that according to the report on Zambia issued by S&P Global last Friday, “although still tight, Government’s fiscal financing position appeared more assured, with domestic liquidity conditions continuing to improve.”

Mr Mutati said S&P Global had also observed in the report that the country’s economic growth prospects were improving, as a result of which, they said, they were revising their “outlook on Zambia to stable from negative and affirming the ratings at ‘B/B’.”

According to a report issued by Benjamin Young, primary credit analyst, and Gardner Rusike, secondary credit analyst, of S&P Global, Zambia’s “stable outlook, balanced on improving macroeconomic picture against a number of negative rating pressures, including a still large fiscal deficit and substantial debt stock.”

They cautioned that the rating could be lowered if the government materially deviated from its fiscal consolidation target.

“We could also lower the ratings if previously destabilising factors re-emerge, for example, if copper prices were to materially fall, or if rainfalls disappointed, or if improvements in the liquidity of the domestic banking system reversed,” they said, adding that “these factors have a substantial bearing on macroeconomic stability, growth, and the government’s financing position.”

S&P Global noted that, “should Zambia’s external imbalances reduce materially faster than expected in tandem with faster growth than they currently expect, which could raise their GDP per capita trend growth forecast, “upward momentum on the ratings could emerge.”