South Africa’s economists are probably learning a hard economic lesson. Once a rating company questions a country’s creditworthiness and there is a downgrade, it’s difficult to reverse the rating.
Fitch Grade has just downgraded SA’s debt to negative and it seems Standard & Poor are short on their heels.
According to economists, there are no more buffers or mechanisms to deal with this crises. A budget deficit, increased debt burden and policy uncertainty lead to a mistrust in the country’s economy.
Currently, SA is experiencing its biggest budget deficit in 10 years, and also a power supplier, Eskom, which consumes money. Moody’s is currently the only rating agency that gives a positive rating to SA, if they also downgrade the economy, the consequences can be catastrophic with a massive outflow of capital from the country.
-Vryburger
This report does not necessarily reflects the opinion of SA
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