The Central Bank kept the policy rate unchanged at 12.5% until the next decision in May 2015. They cited the slowdown in China’s growth as a key component in the policy rate decision because it has a negative impact on global copper prices which in turn has a downward effect on the Kwacha and consequently inflation. This is the first policy rate decision since last month’s election.
The following is the statement that Fitch Ratings released on Friday:
Fitch Ratings has revised the Outlook on Zambia's Long-term foreign and local currency Issuer Default Ratings (IDR) to Positive from Stable and affirmed the IDRs at 'B'. The issue ratings on Zambia's senior unsecured foreign and local currency bonds have also been affirmed at 'B'. The Country Ceiling has been affirmed at 'B+' and the Short-term foreign currency IDR at 'B'.
This time last year, there were many whispers and unconfirmed reports of the government having financial issues – which we later found out they had. Expenditure falling under the category ‘Grants and Other Payments’ was 68.9 percent above budget at K5.4bn! This in combination with unplanned civil service salary increments in September 2013 led to an overall budget deficit of K8.2bn (6.8 percent of GDP) above the projection of K5.4bn.
Fast forward 12 months, the Ministry of Finance released data of the performance of the K42.7bn National Budget in the first half of this year:
[Revenue & Grants of K15.1bn – Expenditure of K18.2bn = Deficit of K3.1bn (2.1 percent of GDP)]
The Government raised revenues and received grants amounting to K15.1bn:
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *