Moody's on May 23 lowered Zambia's long-term issuer ratings to Caa2 from Caa1, and revised its outlook to negative from stable, citing rising external and liquidity pressures and the rising probability of default over the near term.

The rating agency said Zambia's foreign exchange reserves have declined and its cost of debt has mounted since July 2018.

Moody's expects Zambia's foreign exchange reserves to decline further, from approximately $1.1 billion at the end of April, in the absence of financial support from the IMF or debt refinancing.

Moody's also noted Zambia's limited access to market financing, adding that the country's external and liquidity stress is unlikely to be resolved rapidly.

The rating agency projects Zambia's government debt burden to surpass 76% of GDP in 2019, notably higher than prior expectations, and expects a further rise to approximately 80% early in the next decade.