Unchanged credit rating by Moody’s good news for South Africa

Note to Editors: Find attached soundbites in English and Zulu from Alf Less MP.

The decision by Moody’s to hold South Africa’s sovereign credit rating at “Baa3”, with a stable outlook”, is good news for the South African economy. This comes after a series of bad news stemming from negative ratings from ratings agencies. These negative ratings were seen as a clear vote of no confidence in the then finance minister Malusi Gigaba and former President Jacob Zuma.

Friday’s decision by Moody’s highlights the fact that “political developments” over the past two and a half months have had a positive impact on the outlook of ratings agencies and thus of potential investors. However, for significant investment to take place, it will require a sustained programme of action by President Cyril Ramaphosa and Finance Minister Nhlanhla Nene.

The ratings action means our long-term local currency debt, which forms 88.2% of our R2.2 trillion net debt, remains at one notch above “junk status”, with a negative outlook.

The populist expropriation of land without compensation as well as uncertainty around the Mining Charter, must never be used to keep a divided ANC together at the expense of ratings and business confidence. This will only serve to subdue investment.

There are 9,2 million South Africans who do not have work and access to any social security. It is these South Africans who deserve more from the Government of President Cyril Ramaphosa.

President Ramaphosa’s primary focus should not be on populist narratives that seek to placate dissent within the ANC while ignoring the poor. The welfare of ordinary South Africans supersedes the ANC’s narrow party political interests.

Statement issued by Alf Lees MP, DA Shadow Deputy Minister of Finance, 24 March 2018