File image: Ratings agency, Moody's. Reuters.

PARLIAMENT - A further credit rating downgrade by Moody's next month would slash the National Treasury's growth forecast for the current year by half, according to the budget review tabled by Finance Minister Malusi Gigaba on Wednesday.

The prospect is one of three scenarios listed by the finance ministry that would upset its baseline economic forecast, which includes GDP growth of 1.5 percent for 2018.

"In the first scenario, Moody's downgrades local currency debt further.

"The risk premium - a measure of the extra return required by global buyers of South African bonds - increases by 100 basis points, or one percentage point, before returning to the baseline average in 2020. The impact on growth is largely reflected through higher borrowing costs, and lower investment and consumption."

It would see growth slow to 0.7 percent in 2018, 1.3 percent in 2019 and 2 percent in 2020.

Moody's, in late November, placed South Africa's long-term issuer and senior unsecured bond ratings on review for 90 days, a move widely seen as a temporary stay of execution.

- African News Agency