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Nadine Mather and Chloë Loubser
Moody's gives SA some breathing space
On Friday (29 March), South Africa girded its collective loins for the outcome of the scheduled Moody's review of the country's sovereign credit rating. Would there be a downgrade or not? But it seems the ratings agency has adopted a wait-and-see approach as to whether President Cyril Ramaphosa's economic reforms will pan out.
Professor Raymond Parsons
.'Moody's surprise decision not to update SA's sovereign credit rating is welcome - but the economy not yet out of the woods', says NWU Business School economist Professor Raymond Parsons.
It gives the country further breathing space to get its economic and fiscal house in order. While Moody's offered no explanation for the delay in issuing its latest report on the SA economy, it is possible that the credit rating agency took into account the important upcoming election and the uncertainties still surrounding it.
"After the May election, Moody's and other credit rating agencies will presumably want more clarity and certainty on key issues such as likely policy changes, a new cabinet, and SA's future economic direction. The Moody's update remains pending the latest economic and political developments. The Moody's decision should be seen as a stay of execution, rather than as a reprieve," he says.
SA’s debt is rated at Baa3 by the agency, one notch above junk status, with a stable outlook. Moody’s has two scheduled review dates a year but is under no obligation to issue a report.
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