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Tito Mboweni: “The decision by Fitch and Moody’s to Downgrade the Country Further is a Painful One”

Nov 22, 2020

Faizel Patel – 22/11/2020

(Twitter: @FaizelPatel143)

Finance Minister Tito Mboweni says the decision by Fitch and Moody’s to downgrade South Africa further into junk status is painful.

Moody’s has lowered the country’s credit rating one notch to BA2 and maintained a negative outlook citing the impact of the pandemic shock, both directly on the debt burden and indirectly by intensifying the country’s economic challenges and the social obstacles to reforms.

Fitch has also downgraded the country from BB to BB- with a negative outlook reflecting high and rising government debt exacerbated by the economic shock triggered by the COVID-19 pandemic.

However, S&P Global has decided to keep its ratings unchanged at BB- for its foreign currency rating and BB for its local currency, both with a stable outlook.

Finance Minister Tito Mboweni says the downgrade will not only have immediate implications for the country’s borrowing costs, but also constrain the fiscal framework.

“The decision by Fitch and Moody’s to downgrade the country further is a painful one. There is, therefore, an urgent need for government and its social partners to work together to ensure that we keep the sanctity of the fiscal framework and implement much-needed structural economic reforms to avoid further harm to our sovereign rating.”

Government has implored South Africans to adhere to all the necessary health and safety protocols to avoid a second wave of COVID-19 infections, which will have a significant adverse implications for the economy and plans to boost employment.

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