Moody's downgrade a rejection of Nene's MTBPS
7 November 2014
Moody's decision to downgrade the South African government's sovereign debt rating to BAA2 - just one more downgrade above ‘junk' status - is a significant rejection of Finance Minister, Nhlanhla Nene's, Medium Term Budget Policy Statement.
The downgrade means that Moody's and other foreign investors are less confident in the South African government's ability to pay back its debt. Government will have to borrow money at higher interest rates, placing more pressure on the state's coffers.
Moody's stated that the downgrade was for two reasons:
1. Low economic growth and structural problems like the energy crisis.