Government focusing on COVID-19 interventions despite downgrade: Mboweni
Government has noted Fitch’s decision to lower South Africa’s long term foreign and local currency debt ratings further into non-investment grade by one notch to ‘BB’ from ‘BB+’ and maintain the negative outlook.
According to Fitch, the downgrade is a result of the lack of a clear path towards government’s debt stabilisation as well as the expected impact of the coronavirus (COVID19) shock on public finances and economic growth.
The negative outlook reflects the prospect of further significant upside pressure on government debt and additional downside risks associated with the global shock.
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In a statement, Treasury says: "In the midst of the prevailing financial market stress emanating from COVID-19 and credit ratings downgrades by Moody’s and Fitch, government reiterates its commitment to implement structural economic reforms to address the weak economic growth, constrained fiscus and ailing state-owned companies."
It adds: "Government continues to prioritise and implement measures announced by the President aimed at containing the spread of COVID-19 as well as limiting its impact on the economy."
Treasury noted that despite the downgrade and severe disruption in global financial markets, Fitch acknowledged South Africa’s resilience to external shocks.
“To assure all South Africans, government is seized with addressing and minimising the impact of COVID-19, implementing measures to improve economic growth and setting government finances on a sustainable trajectory. This work requires close collaboration and coordination across various sectors of the economy,” Minister of Finance, Tito Mboweni, said.
Asset and Liability Management Acting Deputy Director-General, Tshepiso Moahloli says government is busy addressing and minimising the impact of COVID-19 and fast-tracking the implementation of structural reforms.
Listen to Moahloli below: