( 3 minutes read)
· Standard and Poor’s (S&P) lowered the credit rating for
South Africa to “BB-”, one notch below, due to the “ fallout from
pandemic Covid-19
· South Africa has the highest number of coronavirus cases,
5350 and 103 deaths, in Africa as of 30th April.
Standard and Poor’s (S&P) lowered the credit rating for South Africa
to “BB-”, one notch below, due to the “ fallout from pandemic
Covid-19. After contracting in the second half of 2019 due partly to
the severe power blackouts, the country is headed for another massive
recessionary phase due to supply disruptions. S&P’s assessment is on
the expected lines since it is generally felt that the pandemic has
caused substantial headwinds in the GDP rate of the country, which has
been contracting consistently for quite some time.
South Africa has the highest number of coronavirus cases, 5350 and 103
deaths, in Africa as of 30th April. The spread has slowed down thanks
to some of the proactive measures being taken by the government
including lockdown and inviting Cuban doctors to supplement and
complement the healthcare system in the country. The other day, US
Secretary of State Mike Pompeo had criticized the move and took on
Cuba for exploiting their doctors as reported in www.trendsnafrica.com
recently.
President Cyril Ramaphosa was recently on record that he would
gradually ease the five-week lockdown starting today. S&P’s estimate
is that the South African economy would shrink by 4.5 percent this
year compared with the November 2019 estimates of growth at 1.6
percent.
An economic-support package totaling approximately R500 billion
(US$27.5 billion), has been unveiled by the President recently, which
works out to 10% of the GDP. A part of the resources, South Africa may
have to seek from multilateral agencies like IMF and World Bank. The
IMF estimates that the Covid-19 pandemic is expected to reduce South
Africa’s growth by -5.8% in 2020. Moody’s and Fitch also had
downgraded the country’s rating for the same reasons earlier.
