South Africa's government said it was disappointed by S&P Global's decision to lower its long term foreign and local currency debt ratings further into non-investment grade to ‘BB-’ and ‘BB’ respectively due to Covid-19 related pressures.

In its review published late on Wednesday, the ratings agency said the coronavirus pandemic would have significant adverse implications for South Africa’s already deficient economic growth and fiscal outcomes. It however revised the outlook on the rating to stable from negative, reflecting the balance between pressures related to very low GDP growth and high fiscal deficits against the country’s deep financial markets and monetary flexibility.

"Government is disappointed by S&P’s decision to downgrade the sovereign rating at a time when South Africa is facing one of its most challenging times," a statement issued by the National Treasury said.

"Government welcomes, however, the revision of the outlook to stable from negative, and considers this an indication that the agency at least recognizes some of government’s fiscal and monetary policy measures as strong points."

South Africa has been under lockdown for the last five weeks -- with all activity save for essential services largely grounded -- to try and contain transmission of the coronavirus first reported last December in China but spreading fast around the world.

From Friday, the country will shift to less stringent Level 4 regulations from the current Level 5, allowing some businesses to resume limited operations and individual outdoor exercise like jogging and cycling to occur within a 5 km radius of people's residences and only between 6 am and 9 am in the morning.

"Government continues to prioritise measures announced by President Cyril Ramaphosa aimed at containing the spread of the virus and further acknowledges the negative impact Covid-19 has had on economic activity," the statement from the Treasury issued just before midnight on Wednesday said.

Ramaphosa's administration has announced a R500-billion fiscal package to mitigate the impact of the lockdown.

In its response to the S&P downgrade, the government said structural reforms were now more than ever urgently required to get the economy moving in the right direction. 

"Tough decisions have to be made and collaboration between government, business, labour and civil society remains vital in order to contain the spread of Covid-19 and ensure sustainable economic recovery," it said.

S&P and peers Fitch and Moody's now all rate South Africa below investment grade, making it more expensive for the government to borrow money to plug the national budget deficit.