Fitch Ratings has revised its outlook on Zambia’s Long-term ratings to positive from stable and affirmed the ‘B’ rating.
In a statement, Fitch said the revision of the outlook on Zambia reflects the fact that the outlook for Zambia’s public finances is more positive compared with October 2013, when it downgraded the Long-term outlook to ‘B’.
It says the risk remains that the government will overrun the deficit in 2014, due to the better than expected maize harvest and consequent spending pressure from the Food Reserve Agency, higher wages, as well as the payment of VAT refunds.
Fitch has since forecast a deficit of 5.8% of GDP and an improved fiscal outlook as well as strong GDP growth to contain the debt burden.
Fitch expects consolidated general government debt to peak at 33% of GDP in 2016, well below ‘B’ peers.
It observed that the policy environment has improved, following the uncertainty initially created after the election of President Michael Sata.
“Early pronouncements from the new administration led Fitch to revise the Outlook to Negative in February 2012. However, the decision to revoke regulations that were adversely impacting the foreign exchange market is credit supportive. Although risks persist, particularly ahead of the elections, the business environment has not deteriorated as much as previously expected and the likelihood of significant and adverse policy shifts has significantly reduced.”
“The fiscal outturn for 2013 which was 5.7% of GDP or 6.6% prior to GDP rebasing came out significantly below the budget figure of 8.6% of GDP announced in August 2013. Furthermore, fiscal data for the first six months of 2014 suggest that the deficit was well contained at 2% of GDP which was against a target of 2.5% of GDP,” the statement said.
Fitch says although this partly reflects higher-than-expected VAT receipts due to the build-up in VAT refund arrears making up 2.5% of GDP to exporters, it acknowledges the commitment to expenditure restraint over the first half of 2014.
It added, “The authorities’ decision to approach the IMF, combined with the latest medium-term expenditure framework, which shows the budget deficit falling to 3.2% of GDP by 2017, suggests renewed commitment to fiscal prudence by the government. However, possible pre-election spending ahead of the 2016 presidential contest, failure to agree on an IMF programme as well as the repayment of VAT arrears to mining companies once a final agreement is reached, all add to fiscal risks.”
It added, “Inflation remains above the Bank of Zambia’s 6.5% year-end inflation target. The current account is expected to remain in surplus over the medium term, supported by rising copper production and broadly stable copper prices. Foreign companies’ repatriation of profits abroad is more than offset by strong inflows of FDI.”
“The recent Eurobond issue has boosted reserves above three months of current external payments. The decision to revoke exchange rate regulations as well as the announcement that the government intends to approach the IMF has seen the local currency appreciate 12.9% since May, after a sharp sell-off in the first half of 2014. Nevertheless, the kwacha remains sensitive to external shocks from capital flows or copper prices.”
These rating agencies are nothing but tools of the west to continue manipulating poor African countries.How do you downgrade a nation based on perception just because a new government has come in with different policies from MMD’s policies? These guys have seen the micro economics stability of our nation and they have realized that the PF government is here to stay whether small political parties like it or not. Apart from the Kaunda government, in my opinion this is the second government i have seen, despite its weaknesses, to have the interest of citizens at heart. Look at the massive infrastructure development this government has embarked on, salaries of least paid civil servants have been improved without the full participation of Unions. I truly love President Sata & i wish him…
This is good news for every hard working Zambian who is contributing to the development of this country. Let us not be cynical and negative, instead let us learn to give credit where credit is due.
I totally agree with the recent Fitch Ratings Assessment (FRA) including their revision enough though I think that based on my own assessment, the new rating should have been higher than what is currently obtaining.
I was in Zambia this May and my own assessment is that the smart people of the Zambian Enterprise now have a real grasp of entrepreneurship and their improved income per capita is evident as a new growing middle class with enough disposable income.
Zambia is now more open for business than at any other time in the history of our great nation. I have personally identified specific areas of interest with long term growth prospects and starting next year, I will be diversifying my investments more into Zambia as much as I am doing abroad.
I like what I see …
@Austin2021 mwaice walasa. Your rating at Fitch is at A++++.
MMD, UPND and others are not telling us, the people, how they will push this country closer to South Africa in terms of infrastructural development. How different will their programmes be?
If Nevers or Ichilema can promise to surpass this PF government, if they can promise Lusaka to have 10 fly over bridges then they will probably be getting closer to my people.
Mr the downgrading comes in as a result of the campaign investors fear the worst hence withholding there investments due to the unforeseen situation in the new government,investors have to trust the business atmosphere before investing more or continuing with there investment .with that being said when investors withhold foreign currencies trading becomes difficulty due to inflation and economic instabilities hence leading when buying from outside the country due to the less valuing of the currency. Ok just a few factors but now that the faith has returned in the current Government investors are taking there chances in investing into our young economy.So it is not really about the government but about political atmosphere due to the unforeseen they analyse the political atmosphere because
Sometimes getting a copy and reading through the basis facts and opinions can be also help to positively see and create awareness
Listening from Fitch, reading through their report and interacting with a few here, they got it right especially on the real options we are presented with, given that we cement and translate the investments into savings that create opportunities for reinvestments
The assessing is fair outlook but like any outlook is not cast in stone forever like now we have reached” We need to constantly confirm and recheck against those fundamentals
We Participating actively or passively into these rating agencies data opinions taking every opportunity to create a positive image of…
The working govt does it again. Watch the space more scores are coming.
PF, thanks for the Kafue road it is coming up great. However to decongest Lusaka, you need a major ring road touching Kafue road at Chilanga going all the way to Nampundwe on Lusaka Mongu road and then touching Lusaka Kabwe road at Ten miles and proceeding to touch Great east road at Silverest and proceeding to Chilanga. This one ring road opens up Lusaka for petrol stations and other infrastructure. It will sort out all this issue of all vehicles having to pass through Lusaka town. This must be done now before spaces get closed. Lusaka will just be clear with this ring road and it will bring a major relief to the frustrating congestion. Since we can’t do over head roads, this is the cheaper and better option. Who ever does it also leaves a land mark for Lusaka
The govt working for its people. Soon Zambia will be the most prosperous nation on the continent of Africa. This is the only country that has attracted virtually all the past living US presidents, celebrities, billionaires such as Bill Gates, the clergy etc. Under PF Zambia hosted a UN summit on Tourism. Under PF, Zambia lifted the AFCON trophy. Under PF new districts and provinces have created. Under PF new roads have been built and the old ones being worked on. Under PF Zambia and Botswana will be linked by an ultra modern bridge to ease trade and movements of people and goods. Under PF, an ultra modern international airport is being constructed. Under PF, there is renewed investor confidence in our rich mineral sector, Under PF there are more universities built. What else can I say?
ati dunchi kubeba..ba swine namumfwa eh?? abena dudelove, wanzelu, mei mutungu, imwe bonse bafikamba…ni zeeeeeeee….PF at work..where are the naysayers??? Even these imperialist institutions have admitted that the PF govt is performing wonders, HH’s sarcoma will get even worse as a result of this great news..wanzelu please send your boss/ uncle HH some special creams to use on his face from the UK because I expect HH’s sarcoma to get really bad because this good news is not what you UPND hyenas want to hear. Pabwa..pabwatoooooo!!!!
2020vision u r one serious PF fanatic
Not only is Michael Sata very good at political management but also economic management . A fiscal deficit of only 5.8% for a country that is expanding at an average rate of 6.8% is very good. What is more pleasing is that our debt to gdp ratio is only 33% while the cost of debt service is also only about $200million or I% of Gdp. These are very good economic fundamentals.
Don’t say this; under five won’t stop crying.
2016 is not going to be that easy for HH. With the rate at which the current government is developing this country, i see no campaign tool that will convince the masses unless otherwise. I pity the upnd and worse still the mmd.
I dont need Fitch to tell me how Zambia doing. All I do is just call ba yama. He will tell me everything, umutengo wabunga, imisebo ba PF bapangile niteka fitalale. If ba Sata was fully fit, Zambia was going to be doing ‘wonders’. Lesa abapale ba pepemuke.
This are the same rating agencies which were giving AAA rating to subprime mortgage securities in the US. This rating agencies have no credibility
This report must be very depressing to the likes of Wanzelu and other UPND minions. small wonder none of the them have commented on the positive news from Flitch. Some opposition leaders must be spewing gas from the backside upon reading this report.
@PanAfricanist, dont call your yama because he is lazy and without a job. Call the most progressive citizens that are adding value to the economy. Your yama is probably waiting for free hand outs. Your HH with his Kaposis Sarcoma wont be any help too.
I totally agree with the recent Fitch Ratings Assessment (FRA) including their revision enough though I think that based on my own assessment, the new rating should have been higher than what is currently obtaining.
I was in Zambia this May and my own assessment is that the smart people of the Zambian Enterprise now have a real grasp of entrepreneurship and their improved income per capita is evident as a new growing middle class with enough disposable income.
Zambia is now more open for business than at any other time in the history of our great nation. I have personally identified specific areas of interest with long term growth prospects and starting next year, I will be diversifying my investments more into Zambia as much as I am doing abroad.
I like what I see …
Some good news after all the drudgery of recent months is always welcome.
Definitely the ordinary Zambian now does not have time to idle about, everyone is into some sort of business. we now need double digit growth. The investments from education will be seen 10 years down the line. They need to do more for diaspora though, to encourage them to reinvest in Zambia.