South Africa: Moody's warning shot

Cape Town, South Africa, March 28: Tents are erected to urgently accommodate the homeless in an attempt to limit the spread of the coronavirus in the country. Reuters / Mike Hutchings

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South Africa has bad news. While the country is in containment since yesterday Friday to try to slow the spread of the coronavirus which has already affected more than 1000 people and made a victim, the rating agency Moody's announced overnight that it had lowered the country's rating, Baa3 to Ba1, with a negative outlook.

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with our correspondent in Johannesburg, Claire Bargelès

The three main agencies have now placed South Africa's rating in the speculative category. By placing its rating in the speculative category last night, after months of hesitation, Moody's followed the same route as Fitch and Standard & Poor's, the other two main agencies.

It was only a matter of time, because of the deterioration of the country's economy, but it is an announcement that will plunge South Africa a little more into gloom. It is a decision that comes " at the worst possible time ," according to Finance Minister Tito Mboweni, as the country sees the coronavirus epidemic spread at high speed and hit its economy hard.

► Read also : Coronavirus: total containment for South Africa

The institution justifies this choice by " the continued deterioration of the fiscal situation and structurally very weak growth ". South Africa indeed entered a recession at the end of 2019, and is unable to control its debt. Problems which " will not be dealt with effectively by current policy " according to the agency.

It is therefore a new blow for President Cyril Ramaphosa, whose campaign promises were largely based on the economic recovery of the giant of the continent. It also means that it will now be much more complicated and expensive for the country to borrow and finance its projects.

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  • South Africa
  • Coronavirus
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