A massive increase in projected government debt poses a “major threat” to financial stability in South Africa, the central bank warned on Tuesday, while problem mortgages were also a risk, Reuters reported. South Africa’s government debt is now set to hit 82% of gross domestic product this year as the Treasury grapples with the impact of the COVID-19 pandemic. In its bi-annual review on the soundness of the financial system, the South African Reserve Bank (SARB) said this meant close links between the financial sector and government were now a serious worry.

South Africa could move toward an even deeper junk credit rating this week by losing the only stable outlook on its debt assessments, Bloomberg News reported. Of the 23 respondents in a Bloomberg survey, 12 expect S&P Global Ratings to change its outlook on the country’s credit rating to negative from stable on Friday. That means the next move from the company, which already assesses South Africa’s foreign-currency debt at three levels below investment grade, could be another downgrade. That would take the country to a single B rating and signal an increased probability of a default.

One of the biggest lenders to South African farmers can’t take on new clients or meet half the needs of existing customers until it gets another government bailout to keep operating, Bloomberg News reported. The state-owned Land and Agricultural Development Bank has asked the National Treasury for 7 billion rand ($455 million) to ease its cash woes and reduce debt. The Pretoria-based institution resumed interest payments on its borrowings in August after getting 3 billion rand from the government, but isn’t yet able to meet capital repayments.

South Africa’s insolvent national arms company is seeking to fire 13% of its workers in a bid to survive after the government spurned its plea for a bailout, Bloomberg News reported. Denel SOC Ltd., whose predecessor was established to bypass sanctions against the apartheid regime, has told 379 workers in its artillery, ammunition and armored-car divisions that they could lose their jobs, according to Helgard Cronje, a representative of labor union Solidarity. The so-called section 189 notice sent to the employees is a legal step needed before cuts can take place.

Money owed to aircraft lessors and some creditors of South African Airways is not covered by a 10.5 billion rand ($665 million) government bailout, SAA’s administrators said, Reuters reported. South Africa’s government allocated the latest cash injection for SAA in last month’s mid-term budget, but says it will not put further money into the airline. SAA’s administrators told Reuters on Thursday that 1.7 billion rand owed to lessors and 600 million rand which it owes to creditors from before the airline went into administration nearly a year ago would not be covered.

When South African president Cyril Ramaphosa recently extolled in parliament his government’s provision of R500bn ($31bn) to steer the nation’s battered economy through the pandemic, there was some awkward fine print for the country’s banks, the Financial Times reported.

South Africa’s Competition Tribunal on Friday approved a rescue deal for struggling airline Comair on condition that the carrier freezes job cuts for three years and investors allocate shares to a special purpose black empowerment vehicle, Reuters reported. Comair, which operates the British Airways franchise in South Africa and budget airline Kulula.com, was forced into a form of bankruptcy protection in May after South Africa’s coronavirus lockdown halted its operations two months earlier.

The South African government pledged to freeze public sector wages for the next three years to contain a yawning budget deficit but forecast that debt would peak at a higher level in a mid-term budget unveiled on Wednesday, Reuters reported. Africa’s most industrialised economy was already in recession before the COVID-19 pandemic struck, and one of the world’s strictest lockdowns has exacerbated its woes. The wage-freeze plan raises the risk of strikes by the country’s 1.3 million civil servants and follows a pledge in February by Finance Minister Tito Mboweni to curb a rising wage bill.

South Africa’s government said on Thursday it wanted its national airline flying again in the first half of next year, after giving it a 10.5 billion rand ($650 million) bailout in the mid-term budget, Reuters reported. The Department of Public Enterprises (DPE) said the latest cash injection meant a restructuring plan for state-owned South African Airways (SAA), which has been in a form of bankruptcy protection since December, can now go forward.

World Bank officials have told South Africa’s government it will need to reduce its wage bill to secure a loan and that it doesn’t want the money to be used to bail out insolvent state companies, a person familiar with the situation said, Bloomberg News reported.12 Those demands have stalled negotiations on the loan that began in April, the person said, asking not to be identified because the content of the discussions have not been made public.