The Bank of Zambia (BoZ) says the country’s latest credit rating upgrades by S&P and Fitch mark a major boost for the economy and reflect strong confidence in Government’s ongoing debt restructuring efforts.
Recently, S&P raised Zambia’s rating to CCC+, while Fitch upgraded it to B-, officially lifting the country out of default status for the first time since 2020.
In a statement, BoZ Governor Denny Kalyalya said the improvements confirm that Zambia’s debt is now on a sustainable trajectory. He noted that the previous default classification had pushed up borrowing costs, tightened liquidity, and limited banks’ capacity to support both the private sector and Government operations.
“In other words, financial institutions will now be more willing and able to finance investment and growth in the economy at lower cost — whether through public-private financing projects or increased direct lending to both the private sector and Government,” he said.
Dr. Kalyalya added that the better ratings will allow lenders and investors to extend credit to Zambia more affordably, which in turn will help reduce interest rates, stabilise the exchange rate and, over time, ease the cost of living.
“This is ultimately expected to support a reduction in the cost of living for the average Zambian. The upgrade also has positive implications for Government’s fiscal operations. Under the selective default status, the Government had to rely heavily on domestic financial markets to finance its operations and development investments,” he said.
He further explained that the upgrades will lower pressure on Government’s domestic borrowing and bolster confidence in the broader economic reform agenda.
“In view of the significance of this development for our economy, the Bank will henceforth undertake outreach exercises to unpack these issues and other related matters of public interest,” Dr. Kalyalya said.
By Kuchalo reporter
Picture: Bank of Zambia