South Africa’s finance minister warns ratings downgrade will increase borrowing costs

Africa’s most developed nation warned on Saturday the rating downgrade by Moody’s and Fitch will increase the country’s borrowing costs and limit its fiscal framework

Tito Mboweni, Minister of Finance said, “The decision by Fitch and Moody’s… is a painful one.

“There is an urgent need for government to implement structural economic reforms to avoid further harm to the country’s sovereign rating.”

Credit rating agencies Fitch and Moody’s lowered South Africa’s sovereign ratings further into junk late on Friday on rising debt and more likely weakening in the fiscal strength, while S&P Global affirmed on hopes that credit strength will offset them.

South Africa is Africa’s worst hit nation by the coronavirus pandemic with more than 700,000 infections and 20,000 deaths recorded so far. The country has been in recession since March, as the government enforced one of the world’s strictest lockdowns and global demand for its exports declined.

The GDP fell by more than 17% in the second quarter, and over 2 million jobs were lost.

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