COVID-19: S&P downgrades South Africa debt to 'BB-'

File: The latest S&P credit rating decision keeps South Africa under non-investment grade.

File: The latest S&P credit rating decision keeps South Africa under non-investment grade.

AFP

WASHINGTON - S&P Global Ratings on Wednesday lowered the credit rating for South Africa by one notch to "BB-" due to the "significant adverse implications" of the coronavirus pandemic on the country's already-weakened economy.

"South Africa's already contracting economy will face a further sharp COVID-19-related downturn in 2020," after contracting in the second half of 2019 due partly to the severe rolling power blackouts, the ratings agency said.

READ: Moody’s lowers SA growth forecast

While the agency said the early efforts to contain the spread of the virus have limited the health impact, "The COVID-19 health crisis will create additional and even more substantial headwinds to GDP growth." 

Coronavirus infections rose to nearly 5,350 cases and 103 deaths -- the highest in Africa -- though the spread has slowed and President Cyril Ramaphosa announced he will begin to gradually ease the five-week lockdown starting on Friday.

READ: SA looking at borrowing R95bn for COVID-19

S&P projects the South African economy will shrink by 4.5 percent this year compared with the November 2019 estimate of growth of 1.6 percent.

Ramaphosa last week unveiled a large economic-support package totaling about R500 billion, which is about 10 percent of GDP. However, S&P said some of that can be financed by the IMF and other development lenders.

Source
AFP