It’s off to the tills we go!

The Standard and Poor's building is seen in New York. File picture: Jessica Rinaldi/Reuters

The Standard and Poor's building is seen in New York. File picture: Jessica Rinaldi/Reuters

Published Dec 3, 2016

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Cape Town - Heigh-ho, heigh-ho, it’s off to the tills we go!

As the countdown began to the festive season, which is critical to local business, South Africans breathed a sigh of relief after the country on Friday dodged a downgrade by rating agency Standard & Poor’s which left the country’s credit rating unchanged at BBB-, one level above “junk” status.

S&P did, however, downgrade SA’s local debt by one notch to BBB. It said the economy was still struggling and SA now has another six months to fix that and ease political tensions.

The rand gained more than 1.5 percent against the dollar after the ratings release.

The S&P rating on Friday followed that of Fitch and Moody’s, which have also kept South Africa one notch above the sub-investment grade.

The Treasury said it welcomed S&P’s decision to affirm the long-term foreign currency debt rating at BBB- and said rising risks resulted in the decision to lower the long-term local currency debt rating.

The business community also welcomed the decision.

The CEO Initiative, Business Leadership South Africa and Business Unity South Africa said it meant SA’s long-term foreign currency debt was rated as investment grade by all three major rating agencies.

This was a vindication of efforts by the government, labour and business over the past year to negotiate and undertake structural reforms to drive faster, more sustainable and more inclusive economic growth for the benefit of all South Africans.

“These announcements have affirmed investors’ conviction in (our) economy, but we see it as a beginning rather than an end of a process.

“We recognise that a lot of work is still necessary to reach higher levels of growth and we remain firmly committed to the structural reform programme, including initiatives undertaken by the CEO Initiative.”

The business community said the rating agencies had recognised the measures already implemented to reduce inefficiencies in the economy and efforts to continue working on additional structural reforms to unlock the country’s full growth potential.

The three rating agencies conducted reviews in June when they warned the government to implement structural reforms in the economy.

Weekend Argus

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