CAPE TOWN- Moody’s rating agency warned on Monday that the water crisis affecting Cape Town would cause the city’s borrowing to rise sharply and the provincial economy to shrink the longer the situation lasted.
The severe drought has caused the Western Cape province to cut agricultural output by 20% in 2018, decreasing the wheat crop and reducing apple, grape and pear exports to Europe, according to national government.
The City is still expecting taps to dry by August.
Moody’s report did say they expected the most direct impact to be Cape Town’s operating revenues, as 10% of them are from water charges.
Moody’s is expecting capital expenditure for water and sanitation infrastructure to increase as much as R12.7 billion ($1 billion) over the next five years.
Daniel Mazibuko, an analyst at Moody’s said, “The long-term solutions are likely to require significant capital and operating expenditure,”
The drought is expected to slow down South Africa’s economic rebound, which has seen a surge in agricultural production.
Photo Credit- EWN