Minister of Finance Margaret Mwanakatwe
Minister of Finance Margaret Mwanakatwe

By Margaret Mwanakatwe, MP MINISTER OF FINANCE Ministry of Finance

STANDARD AND POORS on Friday, February, 23, 2018, AFFIRMED ZAMBIA’S RATING AT B WITH A STABLE OUTLOOK. This is a very important assessment of our economy.

The rating outcome is also a confirmation that Zambia’s Economic Stabilization and Growth Programme [ESGP] is firmly grounded and is producing positive results as recently confirmed by other independent agencies such as MOODY’S INVESTOR SERVICE and FITCH RATINGS.

The rating outcome by STANDARD AND POORS demonstrates the international community’s recognition of Government’s strong commitment to the implementation of the economic stabilization and growth reforms, which are targeted at continued macroeconomic stability, fiscal consolidation, and a corresponding accommodative monetary policy stance.

The affirmed rating is also a good signal and an assurance to domestic and external investors – crucial stakeholders in our quest to achieve higher economic growth rates – that we are committed to setting the right conditions for them to realize value from the Zambian economy.

As Government, we undertake to sustain this positive performance and will address the outstanding structural, quantitative, and policy reforms that are needed for the country to remain on the right track and consolidate the current gains in our economic stabilisation and growth journey.

To demonstrate the positive impact of our reform actions, the first bond auction on Government securities for 2018 was last week oversubscribed.

The nation may wish to know that the Government towards the end of last week went in the domestic market to raise K1.65 billion but, gladly, both domestic and foreign bond investors placed bids totaling K3.35 billion – leading to an over subscription of one-hundred-and-three percent.

More importantly and in line with Government’s resolve not to crowd out the private sector in Zambia, I am glad that the auction recorded substantial participation by foreign investors. This development underscores the confidence that the international community has with regard to our economy’s firm fundamentals and generally the positive prospects for business and growth.

The weighted yield rate at 18.63 percent, remained largely changed from the last Bond auction in 2017, signaling the high competition by investors.

With this positive performance, I wish to reassure citizens that the Government will move to address concerns around the rating of high risk of debt distress by implementing a number of institutional and legal reforms. These reforms will assure continued debt and fiscal sustainability going forward.

Further, the Ministry of Finance, working with the Bank of Zambia, will focus on addressing high lending rates as they are a binding constraint to economic growth. In response to this policy initiative, the Bank of Zambia at its last monetary policy committee meeting reduced the policy rate to 9.75% from 10.25% and the reserve ratio to 5% from 8%.

These actions action will begin to provide to the banking system the much-needed liquidity for lending to the economy that will in turn address high lending rates.

The results of the latest assessment conducted by STANDARD AND POORS is a welcome assurance to investors to remain steadfastly confident that Zambia is on track with economic stabilisation and growth.

As Government under the leadership of President Edgar Chagwa Lungu, we will work diligently to ensure that the confidence of our people and that of investors in our good intentions to stabilize and grow the economy, are not taken for granted. We will endeavour to remain focused, firm, and committed to the implementation of the reform and transformational agenda so that the gains in economic stabilisation are protected through enhanced fiscal consolidation and sustained inclusive growth; without leaving anyone behind.

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17 COMMENTS

  1. I nearly said sh1thole country….
    Some good news for a change. Its amazing how we need external validation. Is our self worth that bad?

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  2. Credit rating is shown scoring the credit worthiness of a country between 100 (riskless) and 0 (likely to default).
    Zambia is rated at 34

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  3. Because you are a high risk borrower, the interest rates are higher and the lenders are making a killing. No need to brag when you are poorly rated.

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  4. Why IMF will not lend Zambia money

    Zambia’s relationship with the International Monetary Fund (IMF) has been in the international media once again. According to reports, the latter was last week re-affirming its earlier position that it is unwilling to assist Zambia with a soft loan which would go hand in hand with the country undertaking an economic program to put her financial situation in order. The sticky point is that the Zambian government wants to maintain its high appetite for borrowing, the IMF estimates, Zambia’s total public debt (external and domestic) in 2017 stood at 55.8% of GDP. At an exchange rate of K9.3 per US Dollar, this translates to US $14.61 billion dollars compared to US $2.32 billion in 2011 when the PF came into power. This means that within a spac

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  5. According to reports, the latter was last week re-affirming its earlier position that it is unwilling to assist Zambia with a soft loan which would go hand in hand with the country undertaking an economic program to put Zambia’s financial situation in order. According to the IMF estimates, Zambia’s total public debt (external and domestic) in 2017 stood at 55.8% of GDP. At an exchange rate of K9.3 per US Dollar, this translates to US $14.61 billion dollars compared to US $2.32 billion in 2011 when the PF came into power. This means that within a space of 5 years, the PF Government has borrowed the equivalent of US $12.29 billion. It means that on average, the PF Government has been borrowing US $2.46 billion per annum. It is a very bad sign..!

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    • where did all this money go ???? The jobless still have no jobs, the roads are still in a terrible state, the list goes on and on…………………….WHAT HAPPENED TO $2.46 BILLION PER ANNUM X 5 YEARS ???? WHERE DID THIS MONEY GO TO……………………………………………….dont tell me roads and schools because they are still in a mess and in an even bigger mess than they were 5 years ago !

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  6. “By Margaret Mwanakatwe, MP MINISTER OF FINANCE Ministry of Finance”

    Since when has Ratings Assessments been reported by a Finance Ministers…really laughable…this is now becoming a joke!!

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  7. If you are paying 18,63% on your borrowings, perhaps thats the true reason they are enticed to borrow you money, and not your stability. Most stable countries pay less than 1,5% on 1 year govt bonds.

    As for banks, if they get 18,63% by borrowing to GRZ why would they want to borrow to small scale businesses ?

    This is what is meant by “crowding out”. Econ101.

    You have misintepteted “crowding out” to insinuate foreigners are snapping up your bonds and crowding out your local bond subscribers. Thats not what “crowding out” relates to

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  8. Nothing wrong with borrowing money for infrastructure projects, But i know for sure that all this money is channelled towards the government payroll.
    For those of you who have wondered as to what has become of all the money borrowed! Government is stuck with a huge payroll mess they created.

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  9. Srandard and poors gave this rating 6 months ago so it show that nothing has changed. We havent gone up or down so we have stagnated. Everything coming now from ministry of finance is spin… we owe more thzn our ability to repay and even the slightest move in the $ adds to our bond debt. Kwacha not strong enought to lend in its own right so our bods are in us $ so thenmwe get hit with currency fluctuations. Stop incurring debt

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  10. “…The affirmed rating is also a good signal and an assurance to domestic and external investors…”
    Hon. Minister, apart of your Chinese, Indian and Lebanese criminal associates which are hell-bent of stripping all national assets for personal criminal gain, who else has confidence in you?

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  11. With all these good ratings why change a winning team. Will we
    U ever know the really reason why Mutati was removed?

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