What Happened: Foreign investors have been selling South African government bonds at a high rate of almost 2 billion rand (roughly $130 million) per day this month amid fears of a credit downgrade by Moody's Investors Service, Bloomberg reported Aug. 14. Moody's is the last of the big three credit rating agencies to keep the country's investment grade above "junk" status.
Why It Matters: South Africa continues to face significant economic headwinds that include an increasing financial burden due to inefficiencies at state-owned power monopoly Eskom and a weak currency, among others. President Cyril Ramaphosa has boosted efforts to address South Africa's structural deficiencies, which include endemic corruption, although progress has been slow so far.
Background: Despite Ramaphosa's efforts to spur economic growth, the country has not yet attracted major investment inflows, while unemployment also remains high.
- Can Ramaphosa Halt South Africa's Rot? (July 22, 2019)
- South Africa: An Economic Policy Squabble Goes Public (June 5, 2019)
- South Africa's Election Will Be a Referendum on Pro-Business Policies (May 1, 2019)