Zambia’s international credit rating has been upgraded because of progressive strides government has made since October 2013 when rating and outlook was downgraded.
Fitch, one of the world’s top three rating agencies, has revised Zambia’s outlook from stable to positive while affirming the country’s ceiling at B+.
According to a statement made available to ZANIS in Lusaka today by Ministry of Finance public relations officer, Chileshe Kandeta, Fitch noted Zambia’s significant progress in economic growth, prudent fiscal management and stability in the policy environment.
The considerations in arriving at the rating also included among other things government’s commitment to expenditure restraint which has resulted in containment of the fiscal deficit at 2 percent of the Gross Domestic Product (GDP) against a target of 2.5 percent for the first six months of 2014.
Fitch expects the consolidated general government debt to peak at 33 percent of GDP in 2016, a level that is still below that of most peers.
Fitch recognized that the recent rebasing of the GDP has led to the revision of Zambia’s already robust average growth rate over the past five years to 7.3 percent from 6.8 percent, well above the ‘B’ median of 4.3 percent.
It has been revealed that growth is forecast to remain at a robust 6 to 7 percent between 2014 and 2016, benefiting from the government’s ambitious infrastructural investment programme, rising copper production and continued foreign direct investment (FDI).
And Fitch noted that repatriation of profits by foreign companies is more than off-set by strong FDI inflows assessed at 5 percent of GDP
Meanwhile, Secretary to the Treasury Fredson Yamba described the change in Zambia’s outlook from stable to positive as a testimony of the confidence the international community has in the way the Zambian government is managing the economy.
Mr. Yamba said government’s commitment was to improve further in the management of the economy until the investment grade rating is attained.
He has also affirmed that in line with the goals and objectives articulated in the medium term expenditure framework (MTEF) 2015 to 2017, government will ensure that growth exceeds 7 percent per annum in an effort to support employment creation.
Mr. Yamba said government will among other things maintain macroeconomic stability to support growth and increase capacity in planning and project implementation by players in the economy.
And Mr. Yamba said government looks forward to engaging Fitch and other stakeholders in pursuing the economic transformation of the country and improving the livelihood of the Zambian people.