South Africa’s rating outlook is likely to remain negative due to rising debt levels, high interest payments and the continuing challenges facing Eskom.
This is a warning from Moody’s Vice President of the Sovereign Risk Group, Lucie Villa.
Addressing a webinar on Tuesday afternoon, Villa says the country’s drop in government revenue is significantly higher than those of other emerging market economies.
She says while the country’s’ challenges were exacerbated by the pandemic; the country entered the crisis from a position of weakness.
In the video below, Moody’s changed South Africa’s outlook:
“So I know that many people commented on the 2020 Budget more positively than the original budget because the original budget planned for a more severe drop, so they avoided a very severe drop but once again when we compare with the EM, the 3% of GDP loss in revenue is very large so it really meant that the government has to be careful about managing its spending.”