South Africa’s creditworthiness and downgrading

Die Vryburger

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South Africa's creditworthiness and downgrading. Photo: Die Vryburger
South Africa's creditworthiness and downgrading. Photo: Die Vryburger

South Africa’s economists are probably learning a hard economic lesson. Once a rating company questions a country’s creditworthiness and there is a downgrade, it’s difficult to reverse the rating.

Fitch Ratings has just downgraded SA’s debt to negative and it seems ‘Standard & Poor’ are short on their heels.

According to economists, there are no more buffers or mechanisms to deal with the crisis. A budget deficit, increased debt burden and policy uncertainty has led to a mistrust in the country’s economy.

Currently, SA is experiencing its biggest budget deficit in 10 years, and also the power supplier, Eskom, which just consumes money. Moody’s is currently the only rating agency that gives a positive rating to SA, if they also downgrade the economy, the consequences can be catastrophic with a massive outflow of capital from the country.

Read the original article in Afrikaans on Die Vryburger

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