Following the article I wrote titled Which Sectors and Clusters of the Economy could drive Recovery in Botswana, the second article in the “Alpha Reign Country Series,” that focuses on topics related to the novel coronavirus (COVID-19) puts a spotlight on Zambia. This article goes into discussing the three “ugly” crises that have put pressure on economic recovery in Zambia over the past two decades.
It has been 20 years since the International Monetary Fund (IMF) and World Bank provided its USD3.8 billion debt relief program to Zambia. The initiative roughly reduced Zambia’s annual debt payments between 2001-2005 by USD260 million per annum and by USD130 million per annum between 2006-15. The program was developed under the Heavily Indebted Poor Countries (HIPC) initiative, which boosted Zambia’s economic progress in health and education, and in 2011 the country transitioned to a lower-middle-income economy from a low-income economy. The HIPC initiative was aimed at decreasing roughly 45% of The Government of Zambia’s debt and to support its economic growth and development plans. Between 2004-2014 Zambia had impressive growth levels that averaged 7.4% per annum, however, over the past 20 years, to date, 3 different, consecutive crises have occurred, increasing Zambia’s borrowings, with the “ugliest” being the current coronavirus (COVID-19) crisis. Zambia’s growth slowed to 3.8% in 2018 and 2% in 2019 and is projected, by the IMF, to contract by 3.5% in 2020. Fitch downgraded Zambia’s Long-Term Currency Issuer Default Rating to CC from CCC, Moody’s and S&P also did the same downgrading Zambia’s credit rating to Ca from Caa2 and to CCC from CCC+.
