Government’s response to the rating actions of S&P Global Ratings (S&P), Fitch Ratings (Fitch) and Moody’s Investors Service (Moody’s)
21 November 2020
Government notes the following credit rating decisions made by the ‘big three’ rating agencies (S&P, Fitch and Moody’s):
S&P has affirmed South Africa’s long term foreign and local currency debt ratings at ‘BB-’ and ‘BB’, respectively. The agency maintained a stable outlook.
According to S&P, lockdowns associated with combating the Covid-19 pandemic plunged South Africa into its sharpest quarterly economic contraction in the second quarter of 2020, leading to a large widening of the fiscal deficit and rapidly rising government debt. Nevertheless, there are indications that the economy is beginning to rebound in the third quarter.
Fitch has downgraded South Africa’s long term foreign and local currency debt ratings to ‘BB-’ from ‘BB’. The agency maintained a negative outlook.
According to Fitch, both the downgrade and negative outlook reflect high and rising government debt exacerbated by the economic shock triggered by the Covid-19 pandemic. Further, the very low trend growth and exceptionally high inequality will continue to complicate fiscal consolidation efforts.