Moody's Junk Move a Kickstart for South Africa's Economic Reform?

As the world feels the economic and social impact of COVID-19, South Africans awoke to the news that rating agency Moody's downgraded the economy to junk status, essentially meaning that the country would pay more for borrowing in the future and would not be seen as an attractive investment destination. This threat has been hanging over the country like the proverbial sword of Damocles and is more damning during the country's novel coronavirus lockdown.

Parastatals like energy giant Eskom and South African Airways (SAA), bailed out by the government several times, are failing financially due to gross mismanagement and corruption. Finance Minister Tito Mboweni had asked the government to privatise entities like SAA but to no avail. Now the new junk rating by Moody's may just be the minister's "Hallelujah" moment...

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