The Banking Association South Africa (Basa) has welcomed the decision by Moody’s Investor Services to keep South Africa’s credit rating at investment grade, now with a stable outlook.
"All South Africans – business and consumers – will benefit from this show of confidence in the progress the country has made in addressing some of the concerns previously raised by the ratings agency, and in its economy that is beginning to show some growth," Basa MD Cas Coovadia said on Saturday.
On Friday night, Moody's said it had taken a decision to affirm South Africa's long-term foreign and local currency debt ratings at "Baa3" and also to revise the outlook from negative to stable, because previous deterioration of the country's institutions would gradually reverse under a more transparent, predictable policy framework.
Coovadia said on Saturday another sovereign credit rating downgrade would have inevitably been reflected in the ratings of South Africa’s banks and increased the cost of borrowing for the country, companies, and financial institutions, as well as making it harder to secure essential investment. In the end, all South Africans would have felt the burden.
"Recognition must be given to the efforts by the National Treasury, labour, and business leaders who worked together to persuade the ratings agency – and the broader investment community – that South Africa is determined to achieve sustainable, inclusive economic growth. This ratings decision is a clear indication of what can be achieved by strong leadership which is committed to acting in support of good governance.
"However, South Africa will only regain its investment rating from all three major credit rating agencies once it achieves sustainable levels of higher economic growth and tackles its unacceptably high rates of unemployment, poverty and inequality," Coovadia said.
The country needed:
- Increased policy certainty, especially regarding property rights, land reform, and the mining charter;
- Structural reforms in the economy, including making it easier to bring in necessary skills, while the education system was strengthened; an easier visa regime for tourists; effective support for entrepreneurs; and improving the ease of doing business;
- Stronger fiscal discipline and good governance to eliminate wasteful and unauthorised expenditure and to place state-owned enterprises on a sustainable business footing; and
- Meaningful transformation and empowerment to ensure all South Africans had a stake in the economy.
"South African banks are willing to work with government and other stakeholders to ensure that we make the best use of this opportunity to build an inclusive economy," Coovadia said.
- African News Agency
