‘Painful’ Downgrades Will Raise South Africa’s Borrowing Costs, Says Finance Minister Tito Mboweni

SOUTH Africa’s finance ministry said on Saturday credit ratings downgrades by Moody’s and Fitch would increase the country’s borrowing costs and constrain its fiscal options.

“The decision by Fitch and Moody’s … is a painful one,” Tito Mboweni, minister of finance, said in a statement.

There is an urgent need for government to implement structural economic reforms to avoid further harm to the country’s sovereign rating, he said.

Credit rating agencies Fitch and Moody’s lowered South Africa’s sovereign ratings deeper into junk territory late on Friday on rising debt and a likely further weakening in its fiscal position. S&P Global affirmed its rating.

With the COVID-19 pandemic worsening, South Africa’s tax revenue is falling as the economy contracts, while spending to contain the spread of the virus and cushion its impact on the poor has increased.

At last month’s mid-term budget, the National Treasury forecast South Africa would record a