Chief Economist at the Centre for Risk Analysis Ian Cruickshanks says the decision made on South Africa’s credit rating by Moody’s is the best the country could have hoped for, and affords government time to effect measures that will enhance the country’s economy.
Moody’s has changed its outlook on South Africa’s credit rating from stable to negative but has affirmed the B-aa3 long-term foreign and local-currency issuer ratings.
The B-aa3 rating affirmation takes into account the country’s deep, stable financial sector and robust macro-economic policy framework.
These are set against the on-going challenges related to weak potential growth and strong fiscal pressures.
“The important thing is we still remain in investment grade. It means that international investment funds can invest in South African bonds knowing that we have a rating which allows them to maintain those holdings, and that’s very important. It means that we can continue to raise capital on international markets. It’s the best outlook that we could’ve hoped for… we have two years in which to put into effect all of the propositions that the Minister of Finance made in the Medium-Term Budget Policy Statement. We have breathing space to begin to put our house into order, says Cruickshanks.
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