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“It is not looking good.” This was South African finance minister Tito Mboweni on Thursday, assessing the odds of a positive outcome from a review by Moody’s due today.

The fear is that the rating agency – the last of the big three to maintain an investment-grade rating for South Africa – will change its outlook from stable to negative, paving the way for a downgrade to ‘junk’.

This would add even more problems to an already struggling economy, including South Africa’s removal from the benchmark World Government Bond Index.

Moody’s has stuck to its Baa3 rating – one notch above ‘junk’ – despite a consistently deteriorating outlook, banking on reforms promised by president Cyril Ramaphosa following the doldrums of the Jacob Zuma years.

It will be difficult to give South Africa the benefit of the doubt this time.

The review comes two days after an exceptionally sombre mid-term budget speech by Mboweni.

The expected budget deficit for this fiscal year has soared from 4.5% in February to 5.9%, while the growth forecast has been cut from 1.5% to 0.5%. Debt is expected to rise to 60.9% of GDP, and 71.3% by 2022/23. Meanwhile, the economic damage from struggling state-owned enterprises – especially power utility Eskom – continues.

To quote Mboweni, it is not looking good for the stable outlook.

This report reflects the views of the author alone, not those of How we made it in Africa.

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Today’s picks

From the continent

Governors of the African Development Bank have approved a $115 billion general capital increase for the lender, from $93 billion to $208 billion, the biggest in its history. The move is aimed at supporting the bank’s “High 5” priority areas – power, food security, industrialisation, regional integration, and access to social and economic opportunities. More: African Development Bank

Government workers in Zimbabwe are planning to protest over low pay next week, the country’s main public sector union said on Thursday. The country’s economy is expected to contract by 6.5% this year, amid a spiralling economic crisis. More: Reuters

The global perspective

A record 45 million people in southern Africa are facing severe food shortages in the next six months according to the UN, driven by the impact of climate change, including severe drought. The World Food Programme, Food and Agriculture Organisation and the International Fund for Agricultural Development have jointly appealed for urgent funding to help mitigate the impact. More: Reuters

European Union member countries have reportedly agreed to give Sudan $516 million in grants and humanitarian aid. The country’s transitional government is hoping to kick-start the country’s struggling economy, following the ousting of longtime ruler Omar al-Bashir in April. More: Reuters

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