Headlines

JUNK STATUS THROWS S.A GOVT INTO PANIC MODE AS MBOWENI TAKES SWIPE AT RATING AGENCIES

Lusaka ~ Sun, 22 Nov 2020

By Brightwell Chabusha

South Africa fell deeper into junk territory after Moody’s Investors Service joined Fitch Ratings in lowering the country’s credit ratings on Friday.

Finance minister Tito Mboweni has since failed to present the budget speech, postponing it for later, and wondered how the country got to the state they are in.

Mr Mboweni has said the decision by two rating agencies to downgrade the country further into junk is a painful blow to the country.

He said the move by the two agencies, Fitch and Moody’s will have immediate implications for borrowing costs and constrain government’s budget.

Moody’s cut the nation’s foreign and local currency ratings to Ba2, two levels below investment grade, from Ba1 in which the outlook remains negative.

Fitch cut the nation’s foreign and local currency ratings to BB-, three levels below investment grade, from BB, also with a negative outlook.

“The key driver behind the rating downgrade to Ba2 is the further expected weakening in South Africa’s fiscal strength over the medium term,” Moody’s said in a statement.

Fitch said in a separate release that the pandemic has severely hit South Africa’s economic growth performance, and GDP is expected to remain below 2019 levels even in 2022.

Only five of 23 economists surveyed by Bloomberg predicted Moody’s to cut the rating.

The coronavirus pandemic exacerbated the deterioration of South Africa’s government finances because it weighed on revenue collection, raised the cost of borrowing and pushed the economy into its longest recession in almost three decades.

Mr Mboweni’s medium-term budget last month showed plans to pare the government salary bill, which has surged 51% since 2008, as part of an effort to start bringing the government debt trajectory down after 2026.

The proposed wage freeze risks a backlash from politically influential labor groups that are already in a legal battle with the government to honor an agreed pay deal.

If state salaries can’t be cut, there’s limited room for offsetting measures in other expenditure areas.

“A recovery is on the way as the lockdown was gradually eased during the third quarter and we expect GDP will contract by 7.3% in 2020,” Fitch said.

South Africa’s government debt affordability, measured as the portion of revenue needed to cover interest payments, will deteriorate to 25% in the medium term, according to Moody’s.

 

14 Comments

  1. Ken Sex Legendary

    Tito just give a call to our genius BOZ governor Mvunga to help you fix your SA economy. Mvunga has got the fiscal knowledge that you are lacking Mr Mboweni!!!!

    Reply
  2. MUNTU USIYA

    Kkkkkkkkk…Do u thnk that Zambian economy can be compared to second richest country in Africa with ur kwacha at k21.5/$

    Reply
    • Wakishale

      It is not about how big the economy is but how well it is managed. If Mboweni can fail to manage such a wealthy economy, can he manage ours where even a toothpick is imported?

      Reply
  3. JMS

    Give Caesar what belongs to him and Jesus,so let south do and Zambia will do. But the big argument is who is ahead of the other and what can mvunga do to fix South’s maybe it can be his resignation, people should be ashamed of themselves how developed are and how their workers are being kept. How do you compare a village with a city.

    Reply
  4. JMS

    Give Caesar what belongs to him and Jesus,so let south do and Zambia will do. But the big argument is who is ahead of the other and what can mvunga do to fix South’s maybe it can be his resignation, people should be ashamed of themselves how developed some are and how their workers are being kept. How do you compare a village with a city.

    Reply
  5. Ken Sex Legendary

    Mboweni is no near a match to our BOZ governor Mvunga… Just a little fiscal breakdancing moves by Mvunga would recuperate the SA economy leaving Mboweni, Malema and Maphosa hilariously clapping in awe as to how Mvunga skilfully riggles their books of economy!!!

    Reply
  6. Frank talk

    HH said if he was president he would have fire d the finance Minister. So if he was president of Kenya and South Africa he would have fired all these finance Ministers. HH is very dull he failed to understand 14days, he failed to analyze Covid-19 he said he would have total lock down if he was president, he failed to understand bill of rights. He has failed to fix the parliament by allowing many youths in parliament he only wants tribalists old MPs dull Jack Mwimbi to continue.

    Reply
  7. Jms

    Frank talk is real dull you don’t know what you are taking, sometimes causaulting is better than talking without, the person you are talking is better than what you think he is.

    Reply
  8. Chendabusiku

    Don’t mind Tito, sometimes he doesn’t even understand what he says. This is the Bank Governor of Africa that is how he behaves, especially after being appointed as BEEE reserve bank Governor in South Africa, he thought he would govern all the central banks of Africa. Not long ago he reprimanded ECL for firing his friend D Kalyalya. He does not understand that he was hurting the economy of Zambia by his childish sentiments that he was making about the removal of the Zambian central bank Governor.

    Reply
  9. adviser

    So, this loud mouth is just a loser? Busy trash talking the Zambian leadership when his own house is junk.

    Reply
  10. KC

    We are the next Zimbabwe!

    Reply
  11. KC

    Our economy has turned in to sour grapes. We are the next Zimbabwe!

    Reply
  12. her vena

    All this can be blamed on AU which has failed to push an agenda of single currency and free trade area.This dollar we use has terrible consequences that undermine the strength of our economy.It is like taking a media of groundnuts to sell to Shop rite. Chinese currency can’t determined by the West and we know why.

    Reply
    • Black

      @her vena don’t put the blame on AI leadership, its the people that we handed the offices that are failing economical principles. And with the eager to fill their pockets while the currency is in turmoil. They’ve failed in managing this economy

      Reply

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