South Africa's finance minister Tito Mboweni said earlier today that a credit rating downgrade by Moody's and Fitch will increase the country's borrowing costs and decrease its financial options, describing it as 'painful'.
He called for an urgent need to implement structural reforms to avoid further damage to the country's sovereign rating.
On Friday, Moody's and Fitch downgraded South Africa's sovereign ratings into junk territory due to rising debt and a possible downturn in finances.
As the pandemic worsens, tax revenues for South Africa along with with the economy. Also spending has increased to contain the virus and its impact on the economy.
Last month, the National Treasury projected that South Africa would record a budget deficit of more than 15% of GDP in the fiscal year 2020/21, the highest since the 1990s.
South Africa, which is one of the most industrialized countries in the continent holds a debt of about $260 billion (63.3% of its GDP). The debt-to-GDP ratio is expected to jump to more than 90% in the next three years.
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