GABORONE, May 30 (Xinhua) -- International rating agency Moody's have changed Botswana's sovereign credit rating from stable to negative, the country's reserve bank has said.
Seamogano Mosanako, Head of Communications and Information Services at Bank of Botswana on Saturday issued a statement indicating that Moody's latest out-of-calendar review of the credit ratings, affirmed Botswana's rating of A2 for long-term bonds denominated in both domestic and foreign currency, and changed the outlook from stable to negative.
According to Moody's, this update to the recent March 2020 rating, on a date that deviates from the previously published sovereign release calendar, is prompted by the risks associated with coronavirus shocks, given Botswana's strong dependency on the diamonds industry for growth, exports and budget revenues.
"The revision of the outlook from stable to negative reflects the increasing risks of lower growth, higher budget deficits and likely resultant increase in government borrowing," said Mosanako.
Mosanako said Moody's observed that these adverse effects of COVID-19 pandemic, combined with the current challenges the government faces on fiscal consolidation, could mean further deterioration of fiscal metrics to a level not consistent with the A2 sovereign credit rating.
"The affirmation of the rating, at A2, is underpinned by the government's fiscal position still strong, albeit deteriorating, fiscal and debt metrics, in particular the relatively low public debt level, high debt affordability and fiscal and external liquidity buffers that help in mitigating the impact of the coronavirus shock," said Mosanako. Enditem