The unprecedented economic impact of coronavirus-induced lockdowns has necessitated that governments support their economies. SA recently announced a R500bn fiscal support package to mitigate the adverse health and economic consequences of the Covid-19 pandemic.

S&P Global Ratings, one of the dominant international ratings agencies, does not seem impressed with the government’s expansionary fiscal policy stance. The ratings agency recently reaffirmed the country’s long-term foreign-currency rating at BB-, three notches below investment grade, with a stable outlook. It warned, however, that SA’s coronavirus stimulus package could widen the country’s debt burden to unsustainable levels and weaken the economy. This implies the ratings agency’s next action is likely to be negative. In our opinion this is a faulty assessment of the country’s risk profile. This is why...

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