NEW YORK, Oct 28 (Reuters) - Fitch on Monday downgraded Zambia’s credit rating to B from B-plus on the country’s crumbling government finances and expectations the deficit will remain high.
The African country’s outlook is now stable, Fitch said in a statement.
“The authorities expect a deficit of 8.5 percent of (gross domestic product) in 2013, against an expected deficit at the time of the budget of 4.5 percent and an average of 2 percent - 3 percent between 2006 and 2011,” the statement noted.
“In contrast, Fitch expects further spending over-runs and revenue shortfalls and predicts a deficit of 9 percent of GDP for 2013.”
Earlier this year the International Monetary Fund said that
Zambia’s fiscal deficit is expected to reach 8.5 percent of GDP this year, roughly double the budget target of 4.3 percent due to delays in scrapping a fuel subsidy and higher pay for government workers.
Fitch also said Zambia’s deficit will remain elevated in 2014.
Standard & Poor’s rates the country B-plus with a negative outlook. Moody’s Investors Service rates Zambia B1 with a stable outlook. The ratings from all three agencies are in speculative, or junk, territory.