The Bank of Zambia published FAQs explaining the recent upgrades to Zambia’s sovereign credit rating by Fitch and Standard & Poor’s, linking the move to progress in debt restructuring and improved economic management following the 2020 external commercial debt default. The note sets out how a stronger rating is expected to lower perceived default risk, support investor confidence and, over time, reduce borrowing costs for the Government and the wider economy. Drivers highlighted include improved fiscal discipline, higher copper production, sustained economic growth and declining inflation, alongside an increase in foreign currency reserves to USD 5.2 billion at end-September 2025 from USD 4.7 billion at end-June 2025. The Bank points to an emerging downward trend in yields on government securities and describes its contribution through participation in creditor negotiations, tight monetary policy actions including increases in the Monetary Policy Rate and statutory reserve ratio, and foreign exchange market reforms including foreign exchange market guidelines issued in May 2024 and revised Interbank Foreign Exchange Market (IFEM) rules in June 2024; it also flags risks that could reverse the upgrades, including fiscal slippage, new unsustainable debt, stalled reforms, political instability and external shocks such as lower copper prices, weaker reserves and slower growth. The Bank expects investment in domestic financial assets to pick up further in 2026, while job-creation effects from increased foreign direct investment may take longer to materialise.
Bank of Zambia 2025-12-26
Bank of Zambia publishes FAQs on Fitch and S&P sovereign rating upgrades citing debt restructuring progress and USD 5.2 billion reserves
The Bank of Zambia released FAQs on recent upgrades to Zambia’s sovereign credit rating by Fitch and Standard & Poor’s, citing debt restructuring and improved economic management. Key drivers include fiscal discipline, increased copper production, economic growth, and higher foreign currency reserves. The Bank noted potential risks like fiscal slippage and external shocks, while expecting increased investment in domestic financial assets in 2026.