By Rene Vollgraaff (Bloomberg)
Zambia’s credit profile is constrained by its high debt burden which will increase even more, Moody’s Investors Service said.
The southern African nation’s debt will exceed 75 percent of gross domestic product this year, from around 62 percent in 2017, Daniela Re Fraschini, an analyst at Moody’s, said Thursday in an emailed statement. “Debt affordability is weak relative to peers and fiscal policy credibility is limited, diminished by a series of fiscal slippages,” she said.
Zambia’s external debt climbed to $10.05 billion by the end of last year from $8.74 billion a year earlier as the government continued to spend on building programs despite warnings from the International Monetary Fund and ratings companies that the burden is becoming excessive. Zambia, Africa’s second-biggest copper producer, has failed to persuade the IMF to sign off on a package to boost its budget.
Moody’s cut Zambia’s credit rating to Caa1, seven levels below investment grade, in July.
The company said it could lower the assessment further if credit pressures constraining the
rating were to worsen and the likelihood of the government undergoing some form of default increases.

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