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The Kwacha free fall out of Control, as Moody’s downgrades Zambia’s credit rating

28 September 2015

The Kwacha has continued its free fall against major world currencies.

Today alone the Zambian Kwacha has devalued a couple of times to point where by it closed the day at K19.26 against One British pound.

According to FNB Zambia rates published today, Monday 28, 2015, at 16: 15 hours, one British Pound was selling for K19, 26 (or K19, 260 old currency).

The Euro was going for K14.16 ( K14, 169) while the bank was selling one USD Dollar for K12.66 ( K12, 660).

In Bureaux de change, one Dollar was fetching more than K15.

This trend is expected to get worse as there are no measures that have been put in place to arrest the situation.

Meanwhile, Moody’s Investors Service cut Zambia’s credit rating to B2, five steps below investment grade and said growth would fall below 5% for first time since 2002.

Moody’s said: “the key driver for the downgrade is our expectation that the trend of persistent fiscal deficits and deterioration in debt metrics witnessed over the past few years is likely to continue.’


The Zambian Watchdog has observed, however, that MOODY's latest rating of Zambia has angered the ruling PF, which immediately claimed that they do not recognize Moody’s, one of the three biggest and known international credit rating agencies.

Chileshe Kandeta, the spokesperson for the PF ministry of Finance said that the rating of Zambia by Moody’s Investors Service, should be ignored because the grading is unsolicited and against best practice.

Kandeta said that his PF regime only knows Standard & Poors and Fitch.

But on July 1, 2015, the same Standard & Poor’s also cut Zambia’s credit rating deeper into junk as it forecast the PF government would post a budget deficit far worse than previously estimated, adding to its debt burden.

The rating was lowered to B, five levels below investment grade, from B+, with the outlook changed to stable from negative.

“Zambia’s fiscal position is markedly and negatively deviating from our previous expectations,” S&P said. “Financing this deficit will lead to increased external indebtedness and higher related interest costs.”

Financial Editor, Barotseland Post

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