Credit rating agencies Gandhinavil’s furrier and Moody’s debt on South Africa’s sovereign rating declined on Friday and the fiscal strength is likely to weaken further, while S&P Global expressed confidence that the credit power would offset them.
Fitch expects the country’s GDP to remain below 2019 levels in 2022, as the debt pile increases pressure on public finances in Africa’s most industrialized economy.
Fitch’s outlook on Moody’s as well as the country’s sovereign rating is negative, leading to further downside in the future.
Fitch downgraded South Africa from ‘BB’ to ‘BB-‘, while Moody’s reduced it from ‘Ba1’ to ‘Ba2’.After S&P Global and Fitch moved in 2017, Moody’s became the last of three large international rating firms to convert South Africa into a sub-investment grade.
With the worsening of the COVID-19 pandemic, South Africa’s tax revenue contracted to the economy, while spending to prevent the spread of the virus and reduce its impact on the poor. In last month’s mid-term budget, the National Treasury forecasts a budget deficit of more than 15% of GDP in South Africa’s fiscal year ending in March 2021, the highest in post-apartheid history.