Ratings agencies likely to review SA after 2019 general elections

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Ratings agencies will likely review South Africa again in 2019, after the elections. That is the word from some economists, following Moody’s decision not to review the country’s sovereign credit rating last week.

Economists say it was odd to have a review date before the Medium-Term Budget Policy statement, due next week. This means South Africa’s credit rating with Moody’s remains at investment grade level, currently with a stable outlook.

Moody’s is the last of the three major credit rating agencies that has kept South Africa’s credit rating at investment grade level.

The agency released a note in September, saying a downgrade of the country’s credit rating to below investment grade was unlikely in the near future.

Economists say with the Medium-Term Budget Policy Statement a week away and with a new finance minister in position,  it is best to wait a while before a review.

Intellidex Economist, Peter Montalto, expects Moody’s to keep ratings unchanged in 2018.

He says, in a statement, that the agency could only downgrade the outlook after 2019’s budget, should there be further budget and growth downward surprises, and limited signals of further reforms.

Dr Azar Jammine, of Econometrix, says a decision could only possibly be taken following 2019’s elections. However, there is optimism that South Africa may just avert further downgrades.

Ratings agencies have been concerned about low economic growth levels and governance issues by State-Owned Enterprises.

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