WATER CRISIS
Moody’s warns Cape Town of downgrade
Economist warns that a downgrade of the city’s credit rating amid its water emergency would be 'dire' for the local economy and SA
A credit downgrade looms for Cape Town as the economic consequences of its water emergency deepened with a statement from ratings agency Moody’s that the water supply crisis was “credit negative” for the Mother City. Moody’s has Cape Town on a Baa3 rating, which is still investment grade but at the lowest rung. The ratings agency has the city on review for a downgrade. Moody’s said on Monday that Cape Town’s advance by 10 days to April 12 of its estimate for Day Zero — the day piped water supply to most of its 4-million residents will be suspended — meant that a substantial part of the city’s water revenue of R3.9bn would be lost. Cape Town’s R3.9bn water revenue represented 10% of its total revenue for 2017. Economist Mike Schussler said a downgrade of the city’s credit rating would be “dire” for the local economy and it would have profound consequences for the whole of SA. “Cape Town and the Western Cape economies cannot be seen in isolation. Eskom has just been downgraded. SA’s s...
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