Cost of borrowing in South Africa’s local currency has surpassed Nigeria’s according to newly released figures.
According to Bloomberg, this is a sign of fiscal problems faced by South Africa. On current standards, the country is paying more to borrow in Rands, higher than what Nigeria has to pay in Naira. Nigeria stands four places lower than the rainbow nation on Moody’s Investors Service.
South African bonds have yielded slightly more than a percentage since the government issued them in June to plug a fiscal deficit, causing it to increase to over 15% of its GDP in 2020.
The International Monetary Fund (IMF) last month further revised downwards, growth in Sub-Saharan Africa (SSA) for 2020 from -1.6 per cent to -3.2 per cent due to the effect of lockdowns on economies in the region.
According to the IMF, oil producing countries such as Nigeria and Angola in the continent have been hit by the pandemic. It further revised Nigeria’s growth forecast downwards to -5.4 per cent, from -3.4 per cent.
“South Africa, which is the second largest economy will experience a significant decline of -8 per cent in 2020, mainly due to restrictions imposed on the economy.
“Non-resource intensive countries showed better resilience led by Ethiopia and Uganda,” FSDH Merchant Bank stated in a report.