S&P Global Ratings upgraded Zambia's sovereign rating to CCC+ from selective default, citing progress in restructuring $13.3 billion of external debt.
The agency said about 94% of the debt under negotiation is covered by completed agreements, though some bilateral and commercial deals remain outstanding.
The outlook is stable, reflecting moderate fiscal improvement and continued backing from official creditors despite the country's high financing needs and limited market access.
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The upgrade marks Zambia's most significant step since its 2020 default. S&P warned, however, that delays in the remaining restructuring stages, legal challenges from creditors, or weaker global copper demand could reverse recent gains.
A stronger fiscal path, firmer growth, and faster accumulation of foreign-exchange reserves could support another upgrade.
Zambia's economy remains tied to copper production and exports. Higher output in 2025 and a more predictable regulatory environment have supported revenue, while the government targets a substantial sector expansion by 2031. The rating agency noted that the heavy dependence on copper continues to pose risks if global prices fall.
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Key Takeaways
Zambia's restructuring is being closely watched as a test case for post-pandemic sovereign workouts involving both Paris Club lenders and China, its largest bilateral creditor. The country was the first African sovereign to default during Covid-19, and delays in coordinating its creditor committee slowed progress for years. The new agreements provide clarity on repayment terms and reduce near-term pressure on the budget, but Zambia still lacks access to international capital markets. The government is relying on multilateral financing, mining-sector investment, and reforms to stabilise public finances. Copper, which accounts for most export earnings, remains the key driver of debt-sustainability forecasts. Any sharp downturn in prices or production would complicate efforts to rebuild reserves and restore market confidence.
