Relief was palpable across South Africa when Moody’s announced that it was maintaining South Africa’s credit rating at investment grade.
Reactions of social media in particular have taken this to mean an indifference to government’s more contentious plans, notably introducing a regime of expropriation without compensation.
One Twitter user’s comment was typical: ‘Moody’s doesn’t seem concerned about EWOC. Land appropriation is not listed as a risk. They acknowledge that it’s long-standing ANC policy.’
This would be a misreading of what has taken place. Ratings agencies conduct regular reviews; Moody’s’ last review was in November 2017. They attempt to factor in a range of variables and developments – over both short and long-term horizons – germane to countries’ credit worthiness.
Moody’s has made it clear that it views South Africa’s change in leadership as a positive development, offering prospects for dealing with governance pathologies and setting the country on a growth trajectory, as well as evidence of a strategy to deal with the country’s fiscal challenges. At present, Expropriation without Compensation has not been confirmed as policy, and as such does not feature prominently in the current review.