Fitch has revised Zambia’s outlook from stable to positive

Sovereign Credit rating agency Fitch has revised Zambia’s outlook from stable to positive, and affirmed the country’s ceiling at B .

The revision of the outlook is in recognition of the progressive strides which the Government has made since October, 2013 when the rating and outlook was downgraded.

In determining the Sovereign Credit Rating, Fitch, one of the world%u2019s top three rating agencies, noted Zambia’s significant progress in economic growth, prudent fiscal management, and stability in the policy environment.

Other key considerations in arriving at the rating were; Government’s commitment to expenditure restraint which has resulted in containment of the fiscal deficit at 2% of GDP against a target of 2.5%; improved fiscal outlook and strong GDP growth which has significantly contributed to containment of the debt burden.

Fitch expects the consolidated general government debt to peak at 33% of GDP in 2016, a level that is still below that of most peers; and avoidance of adverse policy shifts and improvement of the policy, business and credit environment.

In a statement, Fitch recognized that the recent rebasing of the GDP has led to the revision of Zambia’s already robust average growth rate over the past five years to 7.3% from 6.8%, well above the %u2018B%u2019 median of 4.3%.

Commenting on the development, Secretary to the Treasury Fredson Yamba welcomed the change in Zambia’s outlook from stable to positive and noted that the development was a testimony of the confidence that the international community has in the way the Zambian Government is managing the economy.

Mr Yamba says government’s commitment is to improve further in the management of the economy until the attainment of an investment grade rating.

He says the cornerstone of the economic policy will be built around prudential macroeconomic management, implementation of structural reforms, and facilitation of an economy where the private sector takes the lead in employment creation.

The Secretary to the Treasury has also affirmed that in line with the goals and objectives articulated in the Medium Term Expenditure Framework [MTEF] 2015-2017, the target of Government will be to ensure that growth exceeds 7 percent per annum in an effort to support employment creation, and narrow the fiscal deficit to around 3 percent to unlock resources for private sector growth; maintain macroeconomic stability to support growth and increase capacity in planning and project implementation by players in the economy; and increase the resilience of the economy to external shocks by expanding the export base and building up reserves; and, accelerate infrastructure development so as to continue diversification of the economy from reliance on copper, by creating an enabling environment for growth particularly in the labour intensive sectors of agriculture, construction, and tourism.