Sovereign downgrade worsens public finance outlook

The global ratings agency announced its decision over the weekend, marking the first downgrade since March 2020 when the country’s economy was clouded by COVID-19.

S&P said the downgrade was due to the deterioration of public finances, due largely to the prolonged downturn in diamonds, and the low hopes for a recovery in the short term. A sovereign credit ratings downgrade directly impacts the country’s cost of borrowing, whilst also having wide-ranging negative effects on investor attraction, confidence and generally pressures foreign exchange reserves, amongst others.