Moody’s sceptical of SA’s debt plan

Ratings agency Moody’s Investors Service expressed scepticism that SA could achieve its debt stabilisation aims outlined in finance minister Tito Mboweni’s supplementary budget on Wednesday. In a statement late on Thursday evening, Moody’s said that “stabilising debt by 2023 in line with the government’s target laid out in this budget will be very difficult to achieve given the challenging growth outlook and fiscal rigidities”. The comment follows the sobering assessment of SA’s finances delivered in the budget, where Mboweni outlined the dire need for SA to rein in soaring debt levels, which are now expected to hit 81.8% of GDP by the end of this fiscal year. In late March Moody’s downgraded SA to junk status — cutting SA’s last investment-grade credit rating — just as the economy entered the harshest phase of lockdown restrictions to slow the spread of the coronavirus. The agency has SA on a negative outlook.