South Africa Ratings Lowered To 'BB-' From 'BB' As COVID-19 Further Impairs Fiscal And Growth Prospects; Outlook Stable

Overview
- COVID-19-related pressures will have significant adverse implications for South Africa's already deficient growth and fiscal outcomes.
- Its fiscal deficits will remain elevated, and the cost of servicing rising public debt will increase to about 6.5% of GDP by 2023.
- In addition, contingent liabilities from state-owned enterprises constitute a significant additional risk to the public balance sheet.
- We have lowered our long-term foreign-currency rating on South Africa to 'BB-' and our long-term local-currency rating to 'BB'.
- The outlook on both the foreign- and local-currency ratings is stable, as South Africa's credit strengths--particularly a credible and consistent central bank, a flexible actively traded currency, and deep capital markets--should facilitate a gradual, albeit painful, external and fiscal adjustment.

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