Following Finance Minister, Tito Mboweni’s, grim Medium Term Budget Speech (MTBS) on Wednesday, South Africa is expected to find out on Friday whether ratings agency, Moody’s, will downgrade the country to junk status.
On Wednesday, Mboweni revealed that the economy was not growing at a good pace; government debt was rising, while Stats SA the previous day said unemployment had risen to 2008 levels.
Economic growth in 2019 was revised down to just 0.5%; the budget deficit was at 6% of gross domestic product; SARS also had a shortfall in tax collection – and there seemed to be no real master plan to significantly boost growth and employment.
Of the top three ratings agencies, Moody’s is the only one that still has South Africa at investment grade.
The ratings agency has previously twice skipped publishing a credit rating for South Africa – it might again decide not to rate the county on Friday.
Still, observers believe whatever the announcement, it will be bad news for South Africa.
If South Africa gets a negative outlook from Moody’s on Friday, it will have a year or so to get its house in order to avoid a credit rating downgrade.
Mboweni on Wednesday said that, at the most, he hopes Moody’s keeps the rating where it is.