S&P Global Ratings has affirmed Zambia’s long- and short-term foreign-currency sovereign credit ratings at CCC+/C with a stable outlook, citing improving macroeconomic conditions and progress in the country’s debt restructuring process.
The ratings agency said Zambia’s recent tender offer to repurchase its 2053 Eurobond should be viewed as a liability-management operation rather than a distressed exchange or default, signalling cautious confidence in the government’s handling of its debt obligations.
S&P noted that despite ongoing fiscal and external vulnerabilities, Zambia remains capable of meeting its debt obligations in full and on time, supported by an improving economic environment and continued engagement with official creditors.
The stable outlook reflects a balance between positive developments, including progress in restructuring negotiations and improving fiscal performance, and persistent risks such as high financing needs and unresolved external debt issues.
“The ratings could come under pressure if the remaining debt restructuring process is delayed, legal disputes complicate creditor negotiations, or Zambia experiences weaker fiscal performance,” S&P said.
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The agency added that Zambia’s credit profile could deteriorate further in the event of a sharp downturn in global copper demand or tighter international financing conditions, both of which would strain the country’s external position.
However, it said the ratings could be upgraded if the government achieves stronger fiscal consolidation, reduces debt-servicing costs, narrows budget deficits and builds foreign exchange reserves at a faster pace.
Zambia defaulted on its external debt in 2020 and has since been undergoing a complex restructuring process aimed at restoring debt sustainability and regaining full access to international capital markets.
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The latest affirmation by S&P comes amid gradual improvements in economic conditions, supported in part by a recovery in copper prices, which remain a key driver of Zambia’s export earnings and fiscal revenues.
Copper markets have remained relatively strong in recent months, supported by easing geopolitical tensions and expectations of sustained demand from China, the world’s largest consumer of the metal.
Analysts say structural demand for copper is also being boosted by long-term trends such as electrification, renewable energy expansion, artificial intelligence infrastructure and data centre development.
These factors have helped sustain investor sentiment toward copper-producing economies like Zambia, even as global economic uncertainties persist.
S&P’s assessment highlights the importance of commodity price stability for Zambia’s economic outlook, given the country’s heavy dependence on copper exports for foreign exchange earnings and budget support.
The ratings agency’s cautious stance reflects both the progress made in stabilising the economy and the risks that remain as Zambia continues to navigate its post-default recovery path.
Market observers say continued fiscal discipline, successful completion of debt restructuring and sustained growth in copper revenues will be critical to improving Zambia’s credit profile in the coming years.
