Zambia's central bank raised its policy rate for the second time this year to counter rising inflationary pressures and warned it may "further adjust the policy rate upward, if inflation persistently remains above the target range."

Zambia's 2020 Budget could increase risks to the sovereign's external debt sustainability unless new sources of grant funding or concessionary lending are found, Fitch Ratings says. The budget envisages a significant increase in such funding, but does not identify the likely sources.

Zambia's central bank left its policy rate steady at 10.25 percent, saying inflation is still expected to remain above the upper bound of its target range for much of the forecast horizon but then revert to the range toward the end this period amid a weakening of near-term growth prospects.

Zambia's central bank on Wednesday increased its benchmark interest rate by 50 basis points to 10.25 percent from 9.75 percent in a move aimed at controlling inflationary pressures.