Bank of Zambia Welcomes Upgrade of Zambia’s Sovereign Credit Rating
The Bank of Zambia has hailed the recent upgrades of Zambia’s sovereign credit rating by Standard & Poor’s (S&P) Global Ratings and Fitch Ratings, describing the development as a “very significant milestone” for the nation’s economic recovery and financial stability.
S&P upgraded Zambia’s rating to CCC+, while Fitch raised its rating to B- from Restricted Default. The upgrades follow the country’s progress in restructuring external debt and strengthening economic management, which the central bank says has helped place Zambia’s debt back on a sustainable path.
Bank of Zambia Governor Dr Denny H. Kalyalya noted that the achievement comes despite major global and domestic challenges, including geopolitical uncertainty, shifting global trade policies, and the devastating 2023/2024 drought that sharply reduced maize harvests and hydroelectric power output.
According to the Bank, the downgrade to Selective Default status in November 2020 had immediate and far-reaching consequences for the financial sector. Local and international institutions were forced to cut credit exposure to Zambia, increase capital buffers, and raise lending rates, making it more difficult for businesses and government to access affordable financing. Foreign investors also reduced participation in Zambia’s financial markets, putting pressure on the exchange rate and inflation.
Dr Kalyalya said the removal of Zambia from default status will now enable both domestic and international financial institutions to expand credit to the country at lower cost, enhancing opportunities for investment, public-private partnerships, and private sector growth.
Some investors had already begun increasing their exposure to Zambia in anticipation of a credit upgrade. The Bank says the confirmed upgrades will reinforce recent declines in Government security yields, support lower lending rates, stabilise the exchange rate, and help reduce inflation all of which are expected to ease the cost of living for ordinary Zambians.
The improved rating also strengthens the Government’s fiscal operations. Under the default status, the Government relied heavily on domestic borrowing, which contributed to high interest rates. With the new ratings, Zambia is better positioned to attract cheaper financing and boost long-term development investments.
“The ratings upgrade represents more than recognition of improved debt sustainability,” Dr Kalyalya stated. “It signals that Zambia’s broader economic reforms have placed the country on a promising trajectory of higher growth, single-digit inflation, a more stable exchange rate, and stronger private-sector-led investment.”
The Bank of Zambia announced that it will begin public outreach activities to further explain the significance of the upgrades and their implications for the economy.
