Mboweni calls for swift action to avoid credit downgrade

Government says reforms need to be implemented urgently to avoid a further credit downgrade to junk status.

It says it has noted the decision by Moody’s ratings agency to keep South Africa’s long term foreign and local currency debt ratings unchanged with a revised outlook from stable, to negative.

South Africa’s credit rating by Moody’s remains at investment grade; which is one notch above junk status.

In a statement, Finance Minister Tito Mboweni says saving the country’s economy will require all hands on deck by labour, government and civil society.

He says economic reforms that already underway have to be implemented without delay.

Government says progress has been made in improving the visa regime to support tourism, the Integrated Resource Plan has been approved to provide certainty around government’s preferred energy mix, and medium-term plans have also been made to support Eskom.

It acknowledges that growth in government’s Compensation bill needs to be addressed and additional revenue measures may be needed to reduce government’s debt burden.

Moody’s said that the negative outlook reflects the material risk that government will not succeed in arresting the deterioration of its finances through a revival in economic growth and fiscal consolidation measures.

The ratings agency added that challenges government faces are evident in the continued deterioration of South Africa’s economic growth and public debt burden trends, despite on-going policy responses.

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