Zambia's bonds rise as 2025 budget earns praise for fiscal reforms

Zambia’s dollar bonds surged following international praise for its 2025 budget, signaling global confidence in the country’s fiscal strategy. The budget, unveiled by Finance Minister Situmbeko Musokotwane on September 27, prompted Morgan Stanley to upgrade Zambia’s bonds to “like” status, reflecting optimism in the country’s financial outlook.

The nation’s $1.7 billion bonds due in 2033 saw yields fall to a record low of 7.86%. This decline was largely attributed to Zambia’s strong fiscal performance in early 2024, with revenues surpassing expectations and government spending kept under control.

Morgan Stanley strategist Neville Mandimika highlighted Zambia’s potential for further fiscal consolidation, pointing to rising copper output and prices, which are expected to bolster the country’s economic prospects. Copper remains a key export for Zambia, driving significant revenue.

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While the international community praised Zambia’s fiscal reforms, local voices expressed concerns over the budget’s omission of immediate solutions for the electricity crisis caused by the El Niño-induced drought. Despite these concerns, the government’s focus on fiscal discipline and debt restructuring has drawn positive attention from global markets.

This financial outlook is crucial as Zambia continues to balance international commitments, such as its IMF program, with addressing domestic challenges like rising fuel costs and energy shortages. With strategic planning and global support, Zambia is positioned to strengthen its economy in the coming years.