adminS&P Global on Friday downgraded its outlook for South Africa’s credit rating to negative, citing weak pace of economic growth, mounting government debt burden and liabilities related to the country’s energy utility, Eskom.
The downgrade significantly increases the probability of a downgrade in the sovereign rating of Africa’s most industrialized economy.
South Africa is already ranked at sub-investment grade by both S&P and Fitch Ratings, while the last of the three main ratings firms, Moody’s, has left it teetering on the edge of “junk” status.
“The negative outlook indicates that South Africa’s debt metrics are rapidly worsening as a result of the country’s low GDP growth and high fiscal deficits,” S&P said.
The outlook has become increasingly bleak. Many had hoped the arrival of President Cyril Ramaphosa, who took over from scandal-hit Jacob Zuma in February 2018, could kick-start growth, but he has instead struggled with the scale of the challenge.
S&P and Fitch moved South Africa’s debt to sub-investment level in 2017, though the reprieve from Moody’s means the country has so far not endured the spike in borrowing costs typically sparked by a downgrade from all three agencies. – Reuters Africa
Online Reporter