Finance Minister Tito Mboweni said the government is ‘not trembling in its boots’ and is committed to reforms to address weak growth and ailing state-owned companies.
This comes after Moody’s downgraded South Africa’s sovereign credit rating to junk status, joining the other two major agencies.
It has downgraded the country one notch to BA1 from BAA3 and maintained a negative outlook.
In response, treasury said government remains committed to implementing structural economic reforms.
National treasury said Moody’s sovereign downgrade to junk status will add to prevailing financial market stress but that it is difficult to say with certainty what the extent of the impact will be.
Moody’s said the main driver behind the downgrade is the continuing deterioration in fiscal strength and structurally very weak growth.
It also said the rapid spread of the coronavirus outbreak will exacerbate South Africa’s economic and fiscal challenges, and will complicate the emergence of effective policy responses.
However, some economists have expressed the view that the markets will be more affected by COVID-19 than the downgrade on Monday.