South African 2020 budget may delay Moody's downgrade

Significance

While the measures have been welcomed by investors, they depend on Pretoria reaching a deal with civil servants, whose unions have denounced the government’s plans.

Impacts

• Despite commitments to a series of growth-boosting structural reforms outlined last year, progress will likely remain halting.
• Renewed funding for embattled South African Airways (SAA) will be a recurring source of public and political contention over the short term.
• Debt costs could rise further if a ratings downgrade sees investors demand even higher yields on South African debt.