SA government disappointed by S&P Global ratings downgrade

JOHANNESBURG – South Africa’s government said it was disappointed by S&P Global’s decision to lower its long term foreign and local currency debt ratings further into non-investment grade to ‘BB-’ and ‘BB’ respectively due to Covid-19 related pressures.

In its review published late on Wednesday, the ratings agency said the coronavirus pandemic would have significant adverse implications for South Africa’s already deficient economic growth and fiscal outcomes. It however revised the outlook on the rating to stable from negative, reflecting the balance between pressures related to very low GDP growth and high fiscal deficits against the country’s deep financial markets and monetary flexibility.

“Government is disappointed by S&P’s decision to downgrade the sovereign rating at a time when South Africa is facing one of its most challenging times,” a statement issued by the National Treasury said.

“Government welcomes, however, the revision of the outlook to stable from negative, and considers this an indication that the agency at least recognizes some of government’s fiscal and monetary policy measures as strong points.”

South Africa has been under lockdown for the last five weeks — with all activity save for essential services largely grounded — to try and contain transmission of the coronavirus first reported last December in China but spreading fast around the world.