While the PF government is fighting Moody’s, one of the three international rating agencies, for downgrading Zambia’s credit rating to negative, the Zambian currency has just dropped to more than K11.00 (K11, 000) per USD.
Last week, Moody’s Investors Service cut Zambia’s credit rating to B2, five steps below investment grade and said growth would fall below 5% for first time since 2002. Moody’s said: “the key driver for the downgrade is our expectation that the trend of persistent fiscal deficits and deterioration in debt metrics witnessed over the past few years is likely to continue.’
This angered the PF, which claimed that they do not recognize Moody’s, one of the three biggest and known international credit rating agencies.
Chileshe Kandeta, the spokesperson for the PF ministry of Finance said that the rating of Zambia by Moody’s Investors Service, should be ignored because the grading is unsolicited and against best practice.
Kandeta said that his PF regime only knows Standard & Poors and Fitch.
But on July 1, 2015, the same Standard & Poor’s also cut Zambia’s credit rating deeper into junk as it forecast the PF government would post a budget deficit far worse than previously estimated, adding to its debt burden.
The rating was lowered to B, five levels below investment grade, from B+, with the outlook changed to stable from negative.
“Zambia’s fiscal position is markedly and negatively deviating from our previous expectations,” S&P said. “Financing this deficit will lead to increased external indebtedness and higher related interest costs.”
But as Kandeta and PF were fighting with the International agency, the Zambian Kwacha was deteriorating.
Resuming its journey further beyond the bottom of world currencies, the Kwacha today crossed the K11 per USD psychological barrier on commercial bank rates.
The British Sterling Pound is steadily racing to reach K17: 00 per Pound.
Today, Monday September 28, 2015, one USD is fetching K11.10 (k11, 100 old currency), according to Zambia National Commercial Bank Rates. The Kwacha is expected to tumble further as the day progresses.
The rates are much, much higher in private bureaux de change where most Zambians buy their Forex.