Quinton Mtyala and Lisa Isaacs
BUSINESS, government and economists have welcomed Moody’s Baa2 sovereign credit rating for South Africa despite earlier fears that the country could be downgraded to junk status.
South Africa’s economic growth at the end of January stood at 0.6% following a month of upheavals in which then finance minister Nhlanhla Nene was replaced on December 9 by the unknown Des van Rooyen, who was himself replaced four days later by former Finance Minister Pravin Gordhan following an outcry.
Yesterday, Black Business Chamber secretary-general Khaya Cishe said Moody’s confirmation of South Africa’s sovereign credit rating was good news, given the expectations of the general public and economists of an impending downgrade.
“It’s very good news given… the prediction that South Africa stood a great chance of being downgraded.
“This confirms our position in South Africa as being a country that is open for investment opportunities. Despite all the challenges over the past few months, it shows we are still heading in the right direction,” he said.
Given predictions of being downgraded and faced with the tough economic climate, the positive verdict by Moody’s should motivate South Africans to work together.
“We don’t want to be downgraded to junk status. The rating by Moody’s gives us a great platform as South Africans as something to work with and something to work together for. It gives us hope to keep our rating above junk status.”
Cishe said he did not foresee South Africa being downgraded to junk status by Standard & Poor’s in June.
Deputy President Cyril Ramaphosa said: “We are very pleased with (the) Moody’s report, where they have kept our rating status as is.
Many people were thinking that they would downgrade us; now they haven’t and that is a great success for us because that shows what we can achieve when we work together.”
Ramaphosa said the National Treasury had to be congratulated for having “led the charge” along with trade unions, business and civil society. “It was very pleasing to see them travel to the investors overseas as a united team, essentially as team South Africa going to sell South Africa.”
Cape Chamber of Commerce president Janine Myburgh said while South Africa had averted junk status, it was still concerning that Moody’s had adjusted the country’s outlook from stable to negative.
“It is the immediate future that concerns us where public finances need to be kept under control and political developments must have a positive effect on our economic stability, with investors appreciably more confident to invest in the future,” said Myburgh.
The need for “sound macroeconomic policies” was now more important and South Africa could not afford more faux pas going forward.
“Moody’s has stated that we would be headed for a ratings downgrade if government debt metrics would falter or if investor confidence was to decline to the extent that external financing was insufficient to fund the current account deficit on an extended basis. We have been warned.”
Standard Bank chief economist Kevin Lings said: “The outlook… will depend on government’s success in enhancing medium term growth and in arresting the deterioration in the government’s balance sheet.”