SA's creditworthiness may no longer be hanging in the balance - it may have already tipped into junk status as a result of the unprecedented power cuts that Eskom implemented this week.
The country is now set to lose its remaining investment grade in the new year when Moody's releases its next rating action in March.
Rolling power outages gripped the nation in darkness for more than a week as the power utility battled complications brought on by wet coal. It also alleged that sabotage and maintenance problems at its power stations were to blame for what is feared could have plunged the economy into a recession in the final quarter of 2019 after a contraction in the economy in the third quarter.
Economists have already revised down growth outlooks, with expectations of output as low as 0.3% for 2019.
Economic activity stalled as mines and other businesses were forced to shut down earlier this week following unprecedented stage 6 power cuts on Monday.
Eskom has not ruled out having to move to stages 7 and 8.
The utility says SA needs an additional 5,000MW of generating capacity to supplement its nominal capacity of 44,000MW. Renewable energy provides 4,000MW.
Following a meeting with the Eskom leadership and the ministers of public enterprises and of energy this week, President Cyril Ramaphosa assured the country that SA would not have to endure a dark Christmas.
On Friday the cabinet held an emergency meeting to discuss the power crisis. Details on how the government plans to address the crisis are expected this week.
But the government's promises concerning Eskom may no longer be sufficient for international credit-ratings agencies and investors.
Elna Moolman, head of macroeconomic, fixed income and currency research at Standard Bank SA, said: "A Moody's downgrade has become inevitable. This further weighs on the growth outlook which is rating-negative."
S&P Global Ratings and Fitch already assign junk status to SA.
The conversation with the government has been sub-optimal
— Sipho Pityana (President of Business Unity SA)
Moody's, which maintains SA's remaining investment grade status, is expected to move after the February budget. If the budget does not indicate improvement on the fiscal deterioration or a credible path to fixing the national finances, Moody's will downgrade SA.
Spending cuts and tax increases are expected, Moolman said.
Economist Thabi Leoka said: "With this added pressure it's going to be very difficult for [Moody's] not to make a move because it's quite clear that things are not all that well and something like an Eskom will be a burden to the fiscus for a long time."
Peter Attard Montalto, a director at Intellidex, said if there were credible announcements by the government to reduce its high wage bill, which consumes a chunk of state finances, as well as allowances for new energy procurement and firm plans for shrinking Eskom's R450bn debt burden, "then it is possible to expect a downgrade from Moody's in November [rather than in March], even with load-shedding and lower growth".
He added: "If there is no shift in direction, then we will definitely get a downgrade. However, equally the bar to cross to get a pause from Moody's is, I think, relatively low."
Attard Montalto said unlocking a new round of investment in renewables and other energy projects could provide "some R650bn of investment [which], combined with other generation projects, would have a massive impact on the economy".
Calculations by the Reserve Bank show that the economy loses R348m a day in nominal GDP from stage 1 power cuts. Stage 4 power cuts shave R753m a day off GDP, according to the central bank.
Power cuts have created uncertainty for investors and a "credibility gap" in the relationship between the government and organised business, which recently expressed concern to the state over load-shedding.
Sipho Pityana, president of Business Unity SA, said this week that in October business was "categorically" given an undertaking that there would not be power cuts later this year.
"Now it's hard to plan around what government tells us . there's a widening credibility gap."
He said many mining firms had experience in self-generating power and in jurisdictions where they operated globally they supplied excess power to communities.
"We need to look at these kind of options.
"Far from running around the world, trying to persuade people to invest in the country, we need to signal certainty of energy supply.
"Without certainty of energy supply, without clarity of policy around certain issues, we continue to create the uncertainty that is repelling investors from an economy and a country that has a lot going for it."
But so far the conversation with the government had been sub-optimal, he said.
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