JOHANNESBURG, March (ANA) - Ratings agency Moody's Investor Services has kept South Africa's credit rating at investment grade, meaning the country has avoided a further downgrade to junk status which would have South Africa out of international indices.
Moody's said it took 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.
The announcement follows Moody's decision to place South Africa's sovereign credit rating under a 90-day review for a possible downgrade, commencing on November 24, 2017. South Africa's credit rating was put on review following continuous reports of "state capture" and maladministration under former president Jacob Zuma.
However, with Cyril Ramaphosa taking over as president last month, government work has improved with the removal of some ministers linked to state capture allegations and new appointments at key state institutions, such as Eskom and the South African Revenue Services.
The ratings agency said the new administration faced equally significant opportunities and challenges, but noted the improved growth performance and prospects, and the announced fiscal adjustment plans in the 2018 budget that would stabilise and eventually reduce the debt burden.
Moody's indicated that steady progress in meeting the objectives set out in the president's state-of-the-nation address (Sona) in February was essential for the sustainability of the country's economic and fiscal prospects. They further noted that political policy and practical problems in meeting diverse economic, social, and fiscal objectives could not be underestimated.
Responding to the decision by Moody's, the National Treasury said the government was working diligently to improve policy certainty, such as the finalisation of controversial mining legislation and key sectoral structural reforms.
"The government fully recognises Moody's assessment of challenges and opportunities the country faces in the immediate to long-term. To improve South Africa's investment and economic prospects, the government continues to work diligently on practical steps to provide the necessary policy certainty such as the finalisation of mining legislation," it said in a statement.
"Through the Sona, the president expressed strong commitment and will to fast-track the implementation and finalisation of key sectoral structural reforms as well as reforms to state-owned companies. The rating action by Moody’s demonstrates that South Africans working together can achieve remarkable outcomes," Treasury said.
- African News Agency (ANA)
