Bloomberg reports that Fitch Ratings cut Zambia deeper into junk Thursday, citing a widening budget gap and a faster-than-expected increase in debt levels. The southern African nation’s Eurobonds slid.
The company lowered its long-term foreign-currency assessment to B-, the sixth-highest junk rating, with a negative outlook, the same level as that at Standard & Poor’s, which has a positive outlook on the debt. Moody’s cut its assessment to Caa1 in July.
Zambia’s 2019 budget, presented by Finance Minister Margaret Mwanakatwe last month, laid out “a significantly less ambitious fiscal consolidation effort” compared to targets her ministry set earlier in September, Fitch said. The country has also consistently failed to trim the budget gap.
“Upward revisions to fiscal deficits and government debt have weakened the credibility of the government’s fiscal targets,” Fitch said in a statement. “Delayed fiscal consolidation and high debt will weigh on macroeconomic stability.”