“Zambia’s economy is based on mining, primarily the copper industry. The fall in the price of copper in 2015 resulted in a considerable reduction in export income, the effects of which continue to be apparent in the Zambian economy,” says Julia Ekberg, country analyst at EKN.
Economic growth in Zambia has slowed and the country’s public debt has increased. Foreign debt and the debt service ratio have also increased while the country’s reserves have been depleted.
The Zambian economy is suffering from a trade deficit even if this is forecast to decrease somewhat over the coming years as the price of copper rises. There is a certain amount of uncertainty regarding the country’s debt and growth rate and the IMF has warned that the country may potentially suffer further negative consequences as a result of rising debt. Taken together, these factors represent an increased risk which has resulted in a downgrading of the country’s status.
About EKN’s country risk classification
EKN monitors developments in countries around the world and assesses the risk of payment problems. The assessment is summarised in a country policy in which we specify the country risk category on a scale of 0 to 7. The lower the figure, the better the country's creditworthiness. Assessments are performed continually, as well as in annual regional reviews made in collaboration with other OECD countries.
Malin Alm Gerentz