Saturday, June 15, 2024

Standard & Poor’s maintains Zambia’s B+ rating


Reuters reports that Standard & Poor’s Ratings Services today affirmed the foreign- and local-currency long-term ratings on Zambia at ‘B+’. We also affirmed the foreign- and local-currency short-term ratings at ‘B’. The outlook is stable. Our transfer and convertibility assessment for Zambia remains ‘B+’.

Our ratings on Zambia are constrained by our view of its low prosperity, balance-of-payments vulnerabilities to shifts in copper prices, and political risks. The ratings are supported by promising investment and economic growth trends, a strong external balance sheet in the wake of debt relief, and a modest debt burden, which has also benefited from debt relief and bouts of double-digit inflation.

We view Mr. Sata’s victory in the Sept. 20, 2011, presidential elections as an indication of a maturing of democracy in Zambia. International observers declared the election to be well-organized, and the handover of power from President Banda’s MMD party (in government for 20 years) to be smooth and uncontroversial. Although President Sata’s Patriotic Front party did not secure a parliamentary majority, we note that he has promised to implement major reforms during his first 90 days in office, including measures to promote transparency in governance.

In our view, however, President Sata’s victory has increased economic-policy uncertainty in Zambia. A long-standing opposition figure, he has supported changing regulation and taxation of the mining sector, possibly with the reintroduction of a windfall tax. He has also favored more expansionary fiscal policies, and called for higher redistribution and lower taxes.

We are also concerned about increased political interference in monetary policy after the dismissal of the central bank governor on Sept. 29, 2011, particularly as he had just six months left in his second term.

[pullquote]In our view, however, President Sata’s victory has increased economic-policy uncertainty in Zambia. [/pullquote]

Zambia’s economic performance so far in 2011 has been positive, buoyed by an increase in copper production and higher copper prices. We expect this will boost the current account surplus, reserves, and fiscal revenue. And given the exceptional maize harvest, we expect per capita GDP growth will exceed 4% in 2011 while inflation remains just over 8%.

Our local-currency rating is equalized with the foreign-currency rating because monetary policy options, which underpin a sovereign’s greater flexibility in its own currency, are constrained by Zambia’s relatively-less-developed domestic private bond market and high inflation. Our T&C assessment is equalized with the sovereign foreign-currency rating to reflect our opinion that the likelihood of the sovereign restricting access to foreign exchange needed by Zambia-based nonsovereign issuers for debt service is similar to the likelihood of the sovereign defaulting on its foreign-currency obligations. This reflects political uncertainties, and the possibility that, in a severe downside scenario, the government might use restrictions on access to foreign exchange needed for debt servicing as a policy tool.

[pullquote]We are also concerned about increased political interference in monetary policy after the dismissal of the central bank governor on Sept. 29, 2011, particularly as he had just six months left in his second term.[/pullquote]

The stable outlook balances improving economic fundamentals against uncertainty regarding the new administration’s economic policies.

The ratings could be lowered if the new administration’s policies shift macroeconomic policies radically, weakening external, fiscal, and monetary fundamentals, or impairing copper production. The ratings could also be lowered if Zambia’s external liquidity were to deteriorate significantly, for instance, as a result of an extended depression of copper prices.

The ratings could be raised if Zambia’s external liquidity were to become less vulnerable to copper prices and if investment in infrastructure were to raise trend economic growth



  1. Watch this get better with Sata’s resolve to improve ZAMBIANS livelihoods. Goodbye Poverty deliberately caused by corruption. 

    The Party shall ensure that all the public institutions, State-owned enterprises and popular mass
    and similar organizations are led by persons who are members of the Party and who are
    uncompromisingly committed to achievements of the Party. PF CONSTITUTION ARTICLE 5: PARTY SUPREME ORGAN
    The Party is the supreme organization and the guiding political force in the land. Its aims and
    objectives as expressed in this Constitution shall provide guidelines for all persons and associated
    to it. (VISIT I hope you now understand the recent firings and replacements.

    • Happens even in America the president elect exercises exective orders and can even stop the outgoing president from making policy or expenditure which will tie him down. Google tranisition in America.

  3. yeah right how about this article from Zambian economist. MCS carry on ur duties Sir (Putin did the same in Russia).Guinea’s Mining ReformsPosted: 03 Oct 2011 04:00 PM PDTImportant mining developments in the west African state of Guinea. The relatively new government of Alpha Conde has passed a new mining code that among other things stipulates that foreign companies would need to invest a minimum of $1 billion and gives the government a free 15% share in mining companies with the option of buying a further 20%, thereby more than doubling the share the state can take in mining projects. Conde’s government has raised other taxes. This is fresh and bold thinking – what is more striking is that the mining companies have broadly accepted it!  

  4. ‘Zambia’s economic performance so far in 2011 has been positive, buoyed by an increase in copper production and higher copper prices.’

  5. Funny this is here now. It used to be ZANIS, Zambia Daily Mail, Times of Zambia and ZNBC. Now it is Reuters. Interesting this is!

    Any one out there seen this of late?

  6. USA is back on track because of political interferance. If Obama did not come in to bailout companies and change exectives, what could ve happened to those companies? reuters do not be baised or go to hell with your stupid manupilations. Finance bank was sold through the back door and it has come through the front door period. Your comments are denting the political atmosphere in the country. The analysis is personal and not professional. Why are you leaving corrupt practises to lower investments.

  7. You just got to love Standard & Poor’s, this ratings agency doesn’t mess about: downgraded the US even when Obama was sulking about it, so their ratings publications carry weight and everyone takes notice. (Not those Barclays Bank crappy ratings)
    Its not even 4 weeks we are moving forward, developing is not about handing out free houses and commissioning projects build the foundation first.
    Cheers and I salute you President Sata!!

  8. Zambia is boiling-I like this man called King Cobra, Ba Sir, spit and bite them hard! Please continue sweeping clean-we have been ruled for too long by cowards fearing the so called foreign investors ripping and vandalising our resources! Any foreign investor Sir should get used to getting a marginal profit and not abnormal profits they have gotten used to. Those not happy let them go, others will come in. Sir, it is time we started seeing benefits of having minerals such as Cobalt, emeralds, Gold,Copper etc.

  9. #8
    I would advise or recommend you watch INSIDE JOB which is a financial documentary narrated by Matt Damon about the late-2000s financial crisis directed by Charles H. Ferguson. You will astonished to find that the same chaps who messed up, are still in power and pulling your President Obama’s strings.

  10. Standard and Poor’s rating is vindication of concerns raised by some of us.
    The rate at which Sata is conducting himself in the economy of the country is sending wrong signals to the international community. If he continues to resorts to unilateral, know it all attitude to purge institutions and its workers without due deligence, Zambia will slide to downwards rating. Indicators have been identified by Standard and Poor’s as: 1 -Sata’s victory in election has INCREASED economic policy UNCERTANITY in Zambia. 2 – Increased political interferencein monetary policy of BOZ governor’s sacking left with only 6 months to go adds further uncertainity with confidence of those handling economy in Zambia.

  11. I am deeply troubled by the complete if not flagrant disregard for the Constitution of Zambia, Laws and Procedural Guidelines in many of the President’s first actions in office.
    I see nothing in this article that endorses the Presidents actions and it will be folly to read this as an endorsement to go on full speed ahead…. except of course if you are still drunk on euphoria juice or have surrendered your right and responsibility to make our governing officials accountable to us.

  12. #2 Happens even in America the president -elect exercises exective orders and can even stop the outgoing president from making policy or expenditure which will tie him down. Google tranisition in America t

  13. #2 RB was using wasting executive orders on threats on chiefs instead of correcting the clogged systems in the country.

  14. Good afternoon

    Somebody I work with once asked me if I knew what an economic crisis produces? I gave him a few answers but he still wasn’t satisfied. Then he said: Economic crisis experts.

    Well, what am I trying to say? As long as the world economies are facing turbulent times, rating agencies will start talking.. and start earning big money..
    Wait until everything stabilises and the seven years of plenty come around: they will be nowhere to be seen.

  15. S & P are just any other orgnisation…nothing special about the report. we know what we doing. Dont tell us stuff we already know… by the was the USA governement crtitised the S & P for not being rationale when it downgraded the USA… So S& P is not gospel…

  16. These are just human beings. They can get it wrong, just like they never saw the Credit Crunch coming. they were busy giving AAA ratings to institutions that were later found belly up. However, dont ignore what they say because the world powers and investors dont ahve an alternative to these Ratings Agencies so they still follow their ratings even though they are discredited. Funny world of human beings.

  17. Do you honestly hand on heart think that the USA deserves an AAA+ Rating.. LOL c’mon my guy, those chaps in Washington are busy printing dollars like its going out of fashion!! LOL

  18. In as much as pipo would want to critcize, ok critcisim is wellcome, but first we need to analize all this moves taken by the president if they are ok or they will harm us, but as for me none of these. Things has suprised me so far because I expected all these pipo to be fired just the first day sata was president and they knew it too.

  19. Go Go Go Go Go!!!!! Mr President thts why we voted for u. Dnt listening to them haters,we were in dire nid of this kind of restructuring.

  20. I will go to sleep now & by the time I wake up, the King Cobra would have swept another area of the country

  21. #25, you are so right. I look forward to the news when I wake up in the morning. This is better than a Hollywood script.

  22.  This is great progress… with our political stability and proof that we can transition  governments and presidents we have the ability to gain a better rating in the coming years.. the economic policies of the coming  administration should focus on improving this rating because it structures the level of credit that zambian citizens themselves get with local banks.. 
     Credit rating allows us to attract investors to buy our bonds.. and other  investments.. so this is great.. 

  23. In Australia, Standards & Poor are being taken to the Federal court for giving Triple A ratings to monetary instruments prior to the GFC, instruments that flopped 4months after they were first rated,we are following this one closely, you never know, we may have to take these ratings with a “pinch” or a “bucket-load” of salt!!!!

  24. #1 in your dreams , If you think Sata will end poverty
    No politician has ever ended poverty ,only hard work
    Will end poverty 

  25. #25 & 26, MCS has brought hope, I now love reading the papers every morning……. “spring cleaning” !!!! cant wait for Passport office and Judiciary.

  26. thank you God… Zambia shall be saved, atlast.   MMD brain washed us by declaring a christian nation…INDEED!!!

  27. this S&R report reminds me of the opinion polls conducted by “Dr” something which projected that RB was headed 4victory.

  28. Together with every thing which seems to be developing throughout this subject matter, a significant percentage of viewpoints are generally rather stimulating. Nevertheless, I appologize, but I can not give credence to your whole theory, all be it exhilarating none the less. It seems to us that your comments are not totally rationalized and in fact you are generally yourself not really wholly convinced of the argument. In any event I did enjoy reading it.

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