Moody’s downgrading Zambia’s rating injurious- GBM

UPND vice president for Administration Geoffrey Mwamba says the downgrade of Zambia’s long-term issuer rating from B2 to B3, and the change in the country’s economic outlook from stable to negative by ratings agency Moody’s will make global financial institutions skeptical about Zambia.

Mr. Mwamba in a statement says the higher perceived risk means the interest rates of lending to Zambia will be increased, thereby making external debt more expensive to service through higher charges.

Mr. Mwamba states that in a bid to stem this, the Central Bank will have to increase or maintain already high interest rates, meaning that access to credit by local businesses, especially Small and Medium-sized Enterprises (SMSs), will remain difficult, holding the economy and job creation prospects back.

He adds that banks will likely increase their interest rates further or cut borrowing altogether in the context of the uncertainty around further spending by Government, especially during the upcoming election campaign period.

QFM