EXPLAINER | S&P Upgrades Zambia’s Credit Rating: What You Must Know
S&P Global Ratings has moved Zambia out of default for the first time in four years, upgrading the sovereign to CCC+ / C with a stable outlook. The decision formally closes a painful chapter that began in 2020 when Zambia became the first African state to default during the pandemic. The new rating signals that global markets now recognise Lusaka’s progress in stabilising its public finances, restructuring debt and restoring policy credibility.
S&P based its upgrade on Zambia’s “substantial progress” in restructuring 94 percent of the 13.3 billion dollar debt under review. Only a small pool of commercial creditors remains outside the framework, and the agency says the risk of disruption from those holdouts is “manageable” due to the legal protections built into the restructuring terms.
This is the clearest confirmation yet that Zambia has avoided a prolonged stalemate similar to the one that hurt countries like Sri Lanka and Argentina.
The rating also reflects improved macroeconomic indicators. Inflation, which had climbed above 20 percent during Zambia’s crisis years, is projected to return to single digits by 2026. Foreign reserves have increased to 5.2 billion dollars, supported by concessional inflows, higher copper earnings and restrained public spending.
S&P says the fiscal consolidation programme remains intact even as Zambia heads toward the 2026 elections, a period that often triggers spending surges and policy reversal in emerging economies.
History is essential to understand the significance of this moment. Between 2015 and 2020, Zambia accumulated large external debts, particularly to Chinese lenders and global bondholders. A combination of drought, weak copper output and heavy borrowing brought debt to more than 120 percent of GDP before the default.
By 2022, several rating agencies placed Zambia at the bottom of global credit rankings. The upgrade to CCC+ does not erase the scars, but it restores a pathway back to the international capital markets.
Copper sits at the centre of Zambia’s recovery story. Production rose 17.8 percent in the first half of 2025 after years of contraction, driven by operational improvements and new investments. S&P says copper will “anchor Zambia’s growth outlook” because global demand from electric vehicles and renewable energy remains strong. Higher volumes and stable prices have strengthened export earnings and boosted fiscal revenue, reinforcing the country’s debt service capacity.
The wider global context also matters. Investors have returned to African high-yield debt in 2025 after two years of volatility triggered by United States rate hikes.
Countries like Kenya and Ivory Coast have already tested the markets successfully, while Ghana, Ethiopia and Tunisia remain in negotiation cycles. Zambia’s upgrade positions it among the few African states showing credible recovery progress, improving its perception among institutional investors who had written it off as a prolonged risk case.
However, significant risks remain. The CCC+ rating means Zambia is still classified as highly vulnerable to external shocks. A sharp fall in copper prices, prolonged drought, or delays in the remaining debt negotiations could strain the outlook. The 2026 election cycle will test fiscal discipline, and reforms in energy, agriculture and state-owned enterprises still face structural hurdles.
S&P notes these risks clearly, which is why the outlook remains stable rather than positive.
For citizens and the private sector, the upgrade carries practical consequences. A stronger rating lowers borrowing costs for government over time, encourages private investment, and boosts confidence in the banking system. Finance Minister Situmbeko Musokotwane says the priority now is to “translate macro gains into jobs and stable prices,” a challenge that requires stronger productivity, deeper energy reforms and faster project execution.
Zambia has taken a significant step out of default, but the next phase is harder. Sustaining credibility will require strict spending controls, transparency in remaining debt deals, and consistent reforms even during the election season.
For now, S&P’s upgrade shifts Zambia’s global perception from a debt cautionary tale to a state cautiously rebuilding its financial reputation.
© The People’s Brief | Ollus R. Ndomu
Hearty congratulations to HH and team. Indeed we did not want to waste time appointing amateurs as Minister of Finance who would have started trial and error kind of jobs. LPM with the late Peter Magande fought this battle before and overcame it. You have equally done the same with the seasoned Situmbeko Musokotwane. Kudos Indeed to everyone involved. Please the up the fiscal discipline you have exhibited even though its very tempting as noted by S&P considering this is tye period when rulling parties spend billions of Kwacha to fund campaigns, purchase party regalia and buy voters. Fruits will now be seen shortly after this achievement.