South Africa\u2019s R500 billion package to prop up its economy will limit the government\u2019s ability to provide financial support to its state-owned enterprises, according to Moody\u2019s Investors Service.<\/p>\n
\u201cThe coronavirus support package will soften economic shock, but contribute to a sharp jump in debt,\u201d Moody\u2019s said in a report.<\/p>\n
\u201cThe measures will weaken South Africa\u2019s public finances and constrain the authorities\u2019 ability to provide support to state-owned enterprises.\u201d<\/p>\n
The government refused further bailouts to its national carrier South African Airways this month, and is currently considering its options to assist the Land and Agricultural Development Bank after it defaulted on loan repayments.<\/p>\n
Moody\u2019s expects South Africa\u2019s budget deficit to widen to 13.5% of gross domestic product in the fiscal year ending in March compared with its previous forecast of 8.5%.<\/p>\n
The widening deficit and guarantees to state-owned companies will push up South Africa\u2019s debt to 84% of GDP by March 2021, according to the rating agency.<\/p>\n
It also said Africa\u2019s most industrialized country could experience a 6.5% contraction this year.<\/p>\n