Minister of Finance Felix Mutati
Minister of Finance Felix Mutati
The revision of Zambia’s sovereign rating by Standards and Poors Global from negative to POSITIVE-WITH-A-STABLE-OUTLOOK is an affirmation of the soundness of the policies being implemented by the Government of President Edgar Chagwa Lungu to stabilize and grow the economy, FINANCE MINISTER FELIX MUTATI has said.

STANDARD AND POORS [S&P] GLOBAL RATINGS has revised Zambia’s outlook on the ‘B’ long -term foreign and local currency sovereign ratings to STABLE FROM NEGATIVE. 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 has said.

“The result from the assessment conducted by S&P Global is a welcome incentive for investors as they should remain confident assured that this country is on track with economic stabilisation and growth,” he said.

“We will work diligently to ensure that the confidence of our people and that of investors in the good intentions of the government to stabilize and grow the economy are not taken for granted,” assured Mr. Mutati.

According to the report on Zambia issued by S&P Global last Friday 25th August, 2017, “although still tight, the government’s fiscal financing position appears more assured, with domestic liquidity conditions continuing to improve.”

S&P Global has also observed in the report that the country’s economic growth prospects are 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’.”

In the report issued by BENJAMIN YOUNG, Primary Credit Analyst, and GARDNER RUSIKE, Secondary Credit Analyst, S&P Global further stated that Zambia’s “stable outlook, balances an 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 destabilizing 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.”

“We have assigned a stable outlook to reflect a number of more positive developments that we expect will continue to reduce pressure on Zambia’s fiscal, economic, and external assessments,” they said, adding that they still assessed “Zambia as being highly vulnerable to a reversal of these trends, despite the authorities implementing policies that aim to reduce macroeconomic susceptibility to such events,” and further stating that, “we have improved our economic growth forecasts and expect increased economic output will be supportive of corrective fiscal measures.”

In the report, S&P Global views reducing fiscal deficits and the stock of debt as CORE TO ZAMBIA’S RATING TRAJECTORY, particularly as larger external debt maturities enter the forecast horizon through 2020.

S&P Global expects the agreement with the International Monetary Fund (IMF) to be in place by year end and that this will act as a policy anchor.

“We also note that discussions with the IMF have been ongoing for well over a year, derailment of an expected agreement could dent confidence, reduce investment, and offset the positive factors,” they said, and cautioned that, “it could also risk the benefit to external finances of increased foreign participation in the government’s local currency debt market.”

S&P Global further noted that, “particularly between now and an IMF disbursement, higher copper prices and an expected increase in copper output are both supportive of not only higher growth but also of banking system liquidity, which in turn is a key source of government financing.”

Copper prices have risen by about 18% in 2017 and core liquid assets in Zambia’s banks by some 44% over the same period. The Bank of Zambia has continued to ease its policy rate and Zambia’s currency, the kwacha, has remained on a slight appreciation path for some time now. As a result of these factors, the cost of debt for the government has also reduced. A related factor, given that inflation has fallen, is that foreign participation in the local bond market has increased by around 2.5% of GDP over 2017, which is a helpful current account deficit financing item.

“On the downside, the factors leading to anticipated higher growth are largely outside of the government’s immediate control, leaving them vulnerable to calming demand for copper or unfavorable weather patterns,” said S& P Global, acknowledging that, “the government has made efforts that are gradually diversifying the country’s energy mix.”

AND Mr. Mutati has reaffirmed that government will continue to pursue fiscal consolidation, economic stabilisation, and growth. He maintained that the Ministry of Finance will remain highly alert on the need to reduce borrowing by enhancing resource mobilisation initiatives such Public Private Partnerships, increasing grant-inflows, and reinforcing tax-related initiatives which are targeted at strengthening enforcement and compliance.

S&P Global Ratings’ analysis of sovereign creditworthiness rests on its assessment and scoring of five key rating factors: (i) institutional assessment; (ii) economic assessment; (iii) external assessment; (iv) the average of fiscal flexibility and performance, and debt burden; and, (v) monetary assessment.

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38 COMMENTS

    • But when it is relegated you say the rating institutions are fake imperialists working with opposition. Learn to accept criticism.

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    • The report from Standard and Life CLEARLY indicates that one of the main factors is the improved outlook is high copper prices on the LME, a factor which arse-licking, job-hugging Mutati or any other PF minions have ABSOLUTELY ZERO control over. So let us not take credit from wind-falls which we have not worked for.

      And it took a visit from Madame Scotland to pump some sense into the thick-heads resulting in the release of HH, acquittal of others to kind of make the governance issue look rosier.

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    • …but it is hh and his band of tribalist misfits called upnd who was blaming the economic downturn on PF and poor economic management, right?? When the PF politicians rightly pointed to dwindling commodity prices and our dpendency on copper, you argued and wrote them off. Then Mme Scotland didn’t come to pump sense into the government “thick-heads”, SHE CAME TO PUMP SENSE INTO hh TO STAND DOWN AND STOP HIS NONSENSE just like Obasanjo did a few days earlier!!!

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    • Iwe Zambian citizen

      IT was lungu who was put in the naughty corner…..he had to drop all fake charges on everyone and stop using police to deny UPND functioning space…..lungu was put on notice and is being watched…no more Mugabe tactics or we petition IMF again..

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  1. Thats good news to hear. Lets work hard to shame the devil, who is the big lier in Zambia. keep it up GRZ and supporting staff especially civil servants

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  2. @Jay Jay
    You can insult, underestimate or even downplay President Lungu and his Government’should steadfastness in improving the economy, the truth is and remains, Zambia is on the upswing. I was on the plane the other day and boy was amazed at an independent article on Zambia! It was positive and so refreshing.
    If you continue demeaning us, (PF), you are just giving us the impetus to even work harder than ever and know what, your convict man will never see the corridors oscar State House believe me. It’s ECL till 2026 as more is yet to come in our country.

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    • So insults are the ones giving you impetus to work harder? Why can’t you work harder without attracting insults and ridicule? You can’t put PF and working hard in one sentence.

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    • @ Malinso

      Can you enlighten Jay Jay on who was responsible in bringing Zambian economy to the edge of collapse?

      As to the “…your convict…”, please check who has been CONVICTED by the High Court of Zambia for
      EMBEZZLEMENT? It looks like Jay Jay “… convict…” was NEVER CONVICTED of any crime by any Court of Law, whilst “…your convict…” is exactly that, YOUR CONVICTED EMBEZZLER.

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  3. If it was a test result, we would say we are now at 50%. Where we go from here depends on what we do going forward. Our being below 50% was largely self-inflicted. We need to move away from partisan mentality and begin to do what is in the best interest of our country. It is quite shameful to continue having our poverty levels in excess of 50% of our small population of 15 million which gives an average population of 1.5million per province. It’s too early to get excited. Developing a nation takes more than just wishful thinking and we need to work smart! We still have Euro bonds to pay in 5 years from now. Are we going to be above stable then? The political noise must die down and all parties that don’t hold conventions should be barred from contesting elections in 2021!!!

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    • “…The political noise must die down and all parties that don’t hold conventions should be barred from contesting elections in 2021!!!…”

      Yes also all leaders who use threats of violence against anyone wanting to challenge them, as in the case of kambwili , for leadership should be banned….

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    • Credit for what? Who has destroyed economy to the point where S&P penciled “negative” outlook?
      Wake-up to the reality which is catching-up. From where will money to repay 9 Billion USD will come from? From your pocket?

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  4. The problem with the opposition in Zambia is that they only think the economic of this country will only improve when hh will be President of this country any thing will not be believed,this kind of thinking really takes me aback, really sad.let’s try to be positive about our country I pray to God.

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    • No it will only improve when lungu gives the opposition space………it will only improve when there are no dictator actions.

      Lungu is only reversing his brutality towards the opposition because of the imf ….period.

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    • Dictatorship is a cost that is unnecessary to the country PF have fired more teargas than all the previous govts put together their Chinese supplier must be smiling all the way to the bank.To that add unnecessary tribal recruitments in security which as increased unprofessional conduct as officers are competing to perform tribal assignments proof look at names of all arresting officers of the opposition .Put this in money terms PF would have real roads made instead of toy roads on DEADNBC.

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  5. Looking at the comments from UPNDonkeys vindicates me. general Kanene, see what I mean? You cannor beat a UPNDonkey at wiahing his country ill luck, but they never succeed, even at the elections…kikikikikkkki.

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  6. Looking at the comments from UPNDonkeys vindicates me. general Kanene, see what I mean? You cannot beat a UPNDonkey at wishing his country ill luck, but they never succeed, even at the elections…kikikikikkkki.

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  7. UPND cadres like this Jay Jay clown are always bitter. Jay Jay the Gay Gay cadre.
    Bitter cheap UPND cadre dogs.
    Long live PF, ECL.
    Short live UPND

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    • Yes Long Live ECL, we want you to see what true leadership looks like. We want to show you how good governance and management of national treasury is done. Long Live ECL, and PF. By this time in the near future PF will be in shreds. So far it is a shell of its old self. MMD is the PF heartbeat.

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  8. “We also note that discussions with the IMF have been ongoing for well over a year, derailment of an expected agreement could dent confidence, reduce investment, and offset the positive factors,” they said, and cautioned that, “it could also risk the benefit to external finances of increased foreign participation in the government’s local currency debt market.”

    We told you PF rats that we are waging a sustained campaign of on line petitions to the IMF among others to tell them of lungus dictatorial tendencies……lucky the commonwealth pumped sense into him and he looks like he is reversing on oppression….

    The IMF should release the money in stages depending on the level of PF thuggery…

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  9. Its great to see the economy being considered stable. Mr. Mutatati i have read the statement btystandard and poors but it does not say it has be upgraded to positive. It has been still graded as b but instead of being negative it has now been graded as b stable albeitvwith caveats. Mr mutati please announce what the truth is not what the spin doctors tell you to say.

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  10. ITS A GOOD THING TO BE SUPERIORY RATED AS THAT HAS AN EFFECT O THE DIRECTION AND FLOW OF CAPITAL IN THE NEW GLOBAL CAPITAL FLOW WE EXPECT MORE EQUITY TO COME AS OPPOSED TO DEBT AS FDIS SEE ZAMBIA INVESTABLE WE EXPECT REDUCED RISKS IN THE FINANCIAL SYSTEM DEPICTING REDUCED COST OF CAPITAL WE EXPECT THE CURRENT ACCOUNT AND CAPITAL ACCOUNT IMBALANCES TO REDUCE TO REFLECT THE RATINGS IN THE NEAR TERM

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  11. standard poors ratings for positive…. economy likely to improve
    negative…. economy to slip backwards
    stable …….. economy like to remain unchanged.
    mr mutati an upgrade would have been to c we are still in b category that indicates to investors that we might not repaay our debts. Research then gloat

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  12. The country was at A in 2010 but it is this government which brought us to negatives so nothing to smile about

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    • Yeah, and what was the price of copper in 2010? Can’t you see copper price is one of the factors cited here by S&P? Remember, once upon a time commodity prices, including that of copper, boomed and then tanked. Do you recall what period this was?

      This is the problem with most Zambians, you try too hard to argue issues out of context just so you can apportion unnecessary blame, or sound smart when you are actually not if we only dig a little deeper. God have mercy!

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  13. @JAY JAY AND YOUR FELLOW TRIBALISTS YOU ARE THE DEVILS INCARNATE.
    ECL AND HIS GOVERNMENT HAVE PROVIDED THE ENVIRONMENT FOR THE IMPROVEMENTS IN THE ECONOMY TO TAKE EFFECT.
    AND ECL IS AT THE WHEEL NOT hh.

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    • I hope he has learned to avoid being a dictator or no IMF and all gains thus far will be reversed…..

      To the PF rats who keep saying UPND want only HH in plot one …..no that is not the case all UPND want is a level playing field without PF directed police brutality towards them…upnd want to be able to hold meeting, press briefs or peacefully rallies where and when they wish with PF and police brutality.

      If asking for that, bear minimums in a democracy, is wanting HH in state house then your lungu is the wrong man for the job…

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  14. @JJ you are so dull! What qualification do you hold? You think UPND first then, Namwala, then Zambia!

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  15. Sharon do qualifications make a person intelligent. Even the president had a qualification but he did a pretty dumb thing to lose his licence to practise law

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