Zambia warned on economic policy

The agency simultaneously affirmed Zambia’s short-term IDR at “B” and Country Ceiling at “BB”.
The agency attributed the downgrading to lack of policy economic direction and questionable decisions done by the new government since winning last September’s general elections.

Among the decisions include reversal of the sale of a state-run telecommunication firm Zamtel to Libya’s LAP Green Network without compensating the company and the probe into how a state bank was sold to Rabobank of the Netherlands.
In a statement, Standard & Poor said the government needed to ensure predictability in its policy, saying uncertainty about future economic policies is causing anxieties.

“In our view, this could have negative repercussions on investments and growth if investors think that the investment climate is deteriorating. The dismissal of the central bank governor in September, when he had just six months left in his second term, and the recent ongoing debate about the status of the registration of the Movement for Multiparty Democracy (MMD), the former ruling party, have also contributed to our impression of increased political interference,” the rating agency said in its statement.

It also expressed concern on reversals of some of the previous government’s privatization on grounds of lack of transparency and flawed processes, which it says could be politically motivated.

The statement however stated that the agency could have lowered its rating on Zambia if the new administration’s policies were to weaken external, fiscal, or monetary fundamentals, or impair copper production. — AFP.