Late on Friday evening Moody’s became the last of the rating companies to cut South Africa’s sovereign credit rating to junk with a negative outlook citing continued deterioration in government’s fiscal strength and weak economic growth.
“Moody’s does not expect current policy settings to address effectively. Both outcomes speak to weaker economic and fiscal policy effectiveness than Moody’s previously assumed,” it said in a statement released on Friday evening.
“The negative outlook reflects the risk that economic growth will prove even weaker and the debt burden will rise even faster and further than currently expected, weakening debt affordability and potentially, access to funding,” it said.
The announcement comes as SA concludes its first day of a nationwide lockdown which has seen almost all economic and productive activity, except for the functioning of essential services, slow or completely shut down as citizens remain at home to stop the spread of the novel coronavirus known as Covid-19.