The South African government has pledged to carry out urgent reforms to improve economic performance following the country’s credit rating downgrade from stable to negative.
“The government is fully aware that short- and medium-term reforms are urgently required to improve economic performance over the next several years”, the country’s Treasury said in a statement after international rating agency Moody’s on Friday night downgraded South Africa’s credit rating from “stable” to “negative.”
South Africa’s credit ratings by Moody’s remain investment grade (one notch above non-investment grade but the latest downgrade is seen as the final step before Moody’s strips South Africa of its “investment grade” Baa3 long-term foreign-currency and local-currency issuer rating, which will leave it at “junk.”
Two other major international rating agencies – S&P Global Ratings and Fitch – have placed South Africa’s credit-worthiness to sub-investment grade (commonly known as junk status).
The government also notes the decision by Moody’s to affirm South Africa’s long term foreign and local currency debt ratings at ‘Baa3’ and also revise the outlook to negative from stable.