Moody’s: R500bn package not enough to prevent sharp contraction while debt surges
Ratings company expects country’s debt-to-GDP ratio to jump to more than 80% this fiscal year
SA’s R500bn support package will not be enough to prevent a sharp contraction in GDP over 2020 and will lead to a significant jump in debt, Moody’s Investors Service said in a report issued on Friday.
Moody’s, which stripped SA of its last remaining investment-grade rating in March, expects the country’s budget deficit to surge to 13.5% of GDP in the 2020 fiscal year, up from its previous forecast of 8.5%. That will push the country’s burden up by 15 percentage points to 84% of GDP, inclusive of guarantees to state-owned enterprises, said the report.