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Mboweni after Moody's downgrade: Govt committed to reforms

Moody's downgraded South Africa's sovereign credit rating to junk status, joining the other two major agencies.

FILE: In response to the ratings downgrade, treasury said government remains committed to implementing structural economic reforms.. Picture: GCIS

JOHANNESBURG – Finance Minister Tito Mboweni has said that to say the government was not trembling in its boots after the Moody’s downgrade was an understatement – but it was committed to reforms to address weak growth and ailing state-owned companies.

Moody's downgraded South Africa's sovereign credit rating to junk status, joining the other two major agencies.

It has downgraded the country one notch to BA1 from BAA3 and maintained a negative outlook.

In response, Treasury said government remained committed to implementing structural economic reforms.

National Treasury said Moody's sovereign downgrade to junk status would add to prevailing financial market stress but that it was difficult to say with certainty what the extent of the impact would be.

Moody's said the main driver behind the downgrade was the continuing deterioration in fiscal strength and structurally very weak growth.

It also said the rapid spread of the coronavirus outbreak would exacerbate South Africa's economic and fiscal challenges, and would complicate the emergence of effective policy responses.

However, some economists have expressed the view that the markets would be more affected by COVID-19 than the downgrade on Monday.