Rating agency Fitch says the uncertainty surrounding Zambia’s IMF programme and the recent First Quantum tax bill show key challenges facing Zambia.
In a note, Fitch says dispute over tax bill presented to First Quantum Minerals Ltd could discourage foreign investors.
Fitch reiterates that an IMF Programme would support fiscal adjustment and make additional sources of long-term external financing available to Zambia.
It says the IMF uncertainty show key Zambia rating weaknesses of weak public finances and high commodity dependence.
Fitch notes that how the dispute related to First Quantum is eventually resolved may have an impact on Zambia’s investment climate.
The rating agency thinks the Zambian Revenue Authority will apply penalties and interest at a lower level to First Quantum than initially assessed.
It said it does not think the Zambian Government will seek to avoid jeopardizing its key foreign exchange earning industry and a major source of employment.
The rating agency noted that Zambia’s other sovereign rating weaknesses include poor power provision and transport infrastructure to Zambia’s Copperbelt.