On Saturday, South Africa’s Finance Ministry had issued a statement saying that a series of sovereign credit rating downgrades of the pandemic-ravaged African continent’s largest industrialized economy, would likely to lead to a contemptuous rise of its borrowing costs, adding strains on its fiscal options adopted to insulate the economy from the pandemic-induced perilous downturn.
In point of fact, latest remark from S. Africa’s Finance Ministry came forth a day after the American credit rating agencies, Fitch and Moody’s, had downgraded the country’s sovereign credit rating deeper into a junk territory citing an excruciating increase in debts alongside a plausible weakening of its fiscal position further amid a global-scale pandemic outbreak at large.
Meanwhile, citing that the S. African Government of President Cyril Ramaphosa must address an urgent need of structural economic reform in order to avert further faltering of the Southern-most tip of the world’s sovereign credit rating, S.
Africa’s Finance Minister, Tito Mboweni said in a statement earlier on Saturday, “The decision by Fitch and Moody’s ... is a painful one”.
S. African sovereign credit rating lowered as pandemic clamps down revenues
On top of that, in the latest flashpoint of a worsening pandemic outbreak which had been wreaking havocs on global demands of a swathe of sectors ranging from mining to commercial industries, S.
Africa’s tax revenues had been witnessing a tattering header, while an increase in Govt. expenses aimed at cushioning up the blows stemmed off the pandemic’s fiscal consequences had been widening budget deficits.
Fanning the flames further, S. Africa’s National Treasury had been quoted saying on last month’s mid-term budget that the country would likely to witness a record budget deficit of more than 15 per cent of the nation’s entire GDP (Gross Domestic Product) during its current fiscal year that would end on March 2021, marking up the highest level in post-apartheid period.
Notably, according to the country’s Finance Ministry, S. Africa has a debt of roughly $260 billion or 63.3 per cent of its GDP to date which is expected to inflate more than 90 per cent over the next three years.