Fitch expects the country's GDP to remain below 2019 levels even in 2022 as the debt pile adds pressure to public finances in Africa's most industrialized economy. [https://bit.ly/3fhfoEx]
Moody's as well as Fitch's outlook on the country's sovereign ratings is negative, making further downgrades more likely in the future.
Fitch downgraded South Africa to 'BB-' from 'BB', while Moody's lowered it to 'Ba2' from 'Ba1'. (https://bit.ly/3345iBS)
In March, Moody's became the last of the big three international ratings firms to downgrade South Africa to sub-investment grade, after S&P Global and Fitch moved there in 2017.
With the worsening of the COVID-19 pandemic, South Africa's tax revenue fell as the economy contracted, while spending to contain the spread of the virus and cushion its impact on the poor increased.
At last month's mid-term budget, the National Treasury forecast South Africa would record a budget deficit of over 15% of GDP in the fiscal year ending March 2021, the highest in post-apartheid history.
However, S&P Global affirmed its ratings, while keeping its outlook on the country stable on the assumption that while the economy faces a sharp COVID-19-related contraction in 2020, it should rebound from 2021. (https://bit.ly/3lQ8dph)
(Reporting by Shivani Singh in Bengaluru; Editing by Arun Koyyur)