Moody’s failure to announce update raises more uncertainty
The Democratic Alliance (DA) is concerned that Moody’s ratings agency failed yesterday to make any sort of announcement regarding South Africa’s sovereign credit outlook. Despite having publicly stated that it would update its position by the end of March 2019 it has not done so. Moody’s has not even given any explanation of why it has not given an update. At the very least there should have been a statement, supported by research, why the rating was to remain unchanged at Baa3 neutral.
This non-event by Moody’s has left the investor market none-the-wiser and has simply extended the uncertainty. Whilst Moodys next scheduled update is expected to be announced on the 1stof November 2019, the next update could occur at any time.
This raises several questions. Why has Moody’s chosen to delay and not communicate until only after the 8th of May elections, considering the threat the ANC’s energy crisis poses for the economy? What concerns the DA the most is that investors are now still unclear about South Africa’s status. With a massive unemployment crisis in our country, certainty must be provided to potential investors.
The DA will write to Moody’s to request an explanation on the reasons why there was no communication on South Africa’s credit rating, as well as a clear commitment on when the next update will be. Without this clarity, international and local investors will without doubt remain cautious if not outright opposed to investing in the South African economy.
Statement issued by Alf Lees, DA Shadow Minister of Finance, 30 March 2019
