The decision not to downgrade South Africa could spell a return of foreign investments through the JSE in to our equities and RSA government bonds.
That’s according to SA Institute of Race Relations (SAIRR) Chief Economist Ian Cruickshanks. He says this will also mean borrowing costs will be reduced for government.
Moody’s confirmed the country’s Baa3 rating and changed the outlook from negative to stable.
South Africa escaped being removed from Citi group’s influential World Government Bond Index.
Moody’s said the recent changes in political leadership offers real prospects of a decisive reversal in the erosion strength of institutions.
The agency is still concerned with the financial challenges facing State Owned Enterprises, especially Eskom, which it says poses material contingent liabilities.
There are also concerns with spending pressures resulting from public wages and the cost of higher education.
Cruickshanks says how government handles land expropriation without compensation is another risk going forward.
WATCH RELATED VIDEO:
