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SA was given grace ahead of downgrade but failed to deliver: economists

Moody’s downgraded South Africa to junk status on Friday night, citing a deterioration in fiscal strength and structurally very weak growth.

Moody's Investors Service. Picture: Facebook.

JOHANNESBURG - Economists have reacted to Moody’s decision to downgrade South Africa's credit rating, saying the country was given grace but failed to deliver regardless.

Moody’s downgraded South Africa to junk status on Friday night, citing a deterioration in fiscal strength and structurally very weak growth.

This month, the South African Reserve Bank suggested the economy would go backward this year, predicting a point 2% contraction in GDP.

Economist Thabi Leoka said this may take the country very long to recover.

“If you look at the chart, if you look at the forecast, it seems we are going into debt all the way into 2027. It does look difficult as well in terms of our capability to pay back debt and our affordability to take debt is now priced differently and much higher.”

Business Unity South Africa (Busa) has also weighed in, saying now was not the time to point fingers.

Busa said while it recognised the urgency in which the country must respond to the downgrade, the focus now should be mitigating the economic impact of COVID-19.