Moody's maintains negative outlook as Cape Town's water crisis looms

Cape Town DamCape Town has directed citizens to use 50 litres of water or less per day amid the water crisis. (Image source: Zaian/Wikimedia Commons)Moody's maintained its negative outlook on the City of Cape Town, which is battling a severe water shortage

The rating agency cited uncertainty over whether the city will be able to avoid "Day Zero", when water supply will be cut and residents will have to queue up at water stations.

"Revenue from water and sanitation sales will be further impacted if this takes places, as well as the costs of operating and administrative costs of distributing emergency water supplies, which will place further pressure on the city’s budget," Moody's said in a statement.

The city on Tuesday pushed its estimate for "Day Zero" to 2019 from August even as it circulated guides on how to use 50 litres of water or less each day.

Cape Town's citizens have acted collectively to conserve water, slashing water usage to 510mn litres per week. However, this is still higher than the targeted 450mn litres.

The water levels in the damns in the region had fallen marginally to 21.9 per cent as of 2 April, data from the city's website showed.

The website also says that the last 10 per cent of a dam's water is difficult to use, making the useable water in a dam about 10 per cent lesser than current levels.

The agency changed its outlook on South Africa to "stable" from "negative" and stopped short of downgrading the country further into junk bond status on expectations of greater transparency in governance under the Ramaphosa administration.

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