BUSINESS MAVERICK: Moody’s casts doubts on South Africa’s bid to stabilise debt

📆 6/29/2020 3:40 AM
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Rating agency Moody’s said late last week that South Africa’s goal to bring its surging debt load under control ‘will be very difficult to achieve’ and ‘unlikely’. That may seem like a statement of the obvious, but it is telling that it was made by Moody’s. If the rating agencies are not convinced by Treasury’s plans, more downgrades could be in the offing, which in turn will make the goal of debt stabilisation even more elusive.

Moody’s commented after Finance Minister Tito Mboweni tabled his supplementary budget on Wednesday, 24 June 2020. Its statement was headlined “Sharp contraction in GDP and revenue leads to debt spike;”. So the rating agency is not convinced by Treasury’s road map at this point.

The ultimate aim is to achieve a budget surplus by 2023 to begin curbing the rise in debt. Moody’s noted that South Africa’s recent history on this score hardly inspires confidence.

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