Moody’s decision is a welcome stay of execution for South Africa 

08 May 2016 

We welcome the decision by Moody’s Investor Services to confirm an investment grade rating, which remains two notches above “junk status”, for South Africa.

However, Moody’s did assign a “negative outlook”, drawing attention to the “implementation risk” associated with pushing through the structural reforms necessary to boost economic growth and create jobs in South Africa.

Structural reforms necessary to boost economic growth and create jobs, as well as turnaround “zombie” state-owned enterprises, have got bogged down, largely as a result of political dynamics in South Africa.

During his budget speech, the Minister of Finance, Pravin Gordhan, promised reform, including board strengthening, of South African Airways. 

However, Dudu Myeni seems to have defeated the reform agenda and remains the chairperson, while the airline’s annual report and financial statements have still not been tabled in Parliament.

And President Jacob Zuma’s visit to “zombie” airline South African Airways appears to have been less about promoting the reform of the airline, than about sabotaging reform of the airline.

Whatever the case, this does not bode well for the ratings decision to be announced by Standard & Poor’s on or about 03 June 2016.

In the end, Moody’s decision remains a welcome stay of execution for South Africa.

Statement issued by David Maynier MP, DA Shadow Minister of Finance, 8 May 2016