Fitch ratings agency has that the 2020 budget in Africa’s red metal producer, could exacerbate risks to the sovereign’s external debt sustainability unless new sources of grant funding or concessionary lending are found. The ratings agency cited an uptick in budget financing without detailing the sources of the funding. Zambia’s 2020 budget has increased by 22.3% to K106.3billion.
Finance Minister, Dr. Bwalya Ng’andu in his debut budget presentation projects to narrow the fiscal deficit to 5.5% in 2020 while growing the economy by a targeted 3.1% from 2.2% in 2019. Other metrics the former central bank targets to achieve are 2.5months of import cover.
Fitch had earlier in June rated the red metal producer to CCC from B- (-ve outlook) citing rising risks to growth and the high external financing needs coupled with declining foreign exchange reserves which increases the sovereign vulnerability to external shocks.
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