By 
Economist, Lubinda Haabazoka, has outlined the benefits of Zambia’s recent upgrade by Moody’s, which raised the country’s credit rating outlook from stable to positive, emphasizing enhanced investor confidence and improved creditworthiness.
On Friday, Moody’s Credit Rating Agency affirmed Zambia’s local and foreign currency long-term issuer ratings at Caa2, while changing the outlook to positive.
The agency cited expectations of a steadily decreasing government debt burden, driven by stronger economic growth and continued fiscal consolidation.
Haabazoka explained in a statement issued on Thursday that the positive outlook reflected expectations of sustained economic growth, supported by fiscal reforms and a recovering mining sector, crucial for job creation and poverty reduction.
He noted that this development would enhance Zambia’s economic stability, making the country more attractive to both domestic and international investors, potentially leading to increased foreign direct investment and better access to capital markets.
“A positive outlook can also lower borrowing costs. As investor confidence rises, Zambia may benefit from reduced interest rates on loans and bonds, which is key as the country continues its debt restructuring efforts,” Haabazoka said.
He added that the improved outlook underscored the effectiveness of Zambia’s economic reforms, including fiscal consolidation and efforts to diversify the economy, laying the foundation for long-term economic resilience.
Haabazoka further emphasized the importance of strategic actions to enhance Zambia’s credit ratings and attract more investment.
He suggested accelerating debt reduction and restructuring as essential steps.
While Zambia has restructured approximately 90 percent of its debt, including agreements with major creditors like China and Eurobond holders, he stressed that the remaining 10 percent, particularly private debts, requires swift and equitable restructuring.
“Finalizing these agreements will solidify Zambia’s fiscal stability and demonstrate a commitment to sustainable debt management,” Haabazoka stated.
He also highlighted the need for continued efforts to reduce the budget deficit and enhance domestic revenue collection, which includes broadening the tax base, improving compliance, and implementing measures like electronic invoicing to reduce the VAT gap.
In addition to mining and agriculture, Haabazoka urged the government to focus on developing other sectors, including manufacturing, ICT, and tourism.
Creating a conducive business environment by addressing bureaucratic barriers, improving infrastructure, and enhancing governance will be crucial in attracting private investment and stimulating job creation.
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