Let's work together to ensure economic recovery

Wednesday, November 22, 2017

South Africans should work together to ensure the country’s full economic recovery, says National Treasury’s acting Accountant General Zanele Mxunyelwa.

This as rating agencies Moody’s Investor Service and Standard & Poor's (S&P) are expected to announce their rating decisions with respect to the South African economy on Friday.

“You cannot influence rating agencies. However, in terms of National Treasury we felt that we should be transparent about what is in the economy and to strengthen governance,” said the Accountant General.

Speaking to SAnews at a ceremony to welcome the United Kingdom (UK) as a partner of the Financial Management Improvement Programme III (FMIP) in Tshwane on Tuesday night, the acting Accountant General said government is further working on cost containment measures.

“We are waiting for them, but we believe that in any economy it has ups and downs, we should all work together to make sure that our economy improves,” said Mxunyulwa.

The acting Accountant General echoed government’s message that it is committed to restoring the country’s sovereign credit rating to a favourable investment grade rating.

In its announcement on 9 June, Moody’s announced that it had moved South Africa’s long-term foreign and local currency debt ratings to ‘Baa3’ from ‘Baa2’ and maintained the negative outlook. The decision still puts the country at investment grade.

Moody’s said the downgrade was driven by the weakening of the country’s institutional strength, reduced growth prospects reflecting policy uncertainty and slower progress with structural reforms. The rating agency also cited the continued erosion of fiscal strength due to rising public debt and contingent liabilities.

At the time, National Treasury said while the ratings are still investment grade, the negative outlook indicates that the risk of further downgrades is still there.

“The urgent priority is reigniting confidence as well as reclaiming and maintaining the investment grade ratings. The Minister of Finance will ensure that the joint work of government, business, labour and civil society continues at a faster pace. The commitment is to improve investor and consumer confidence through fast-tracking the implementation of the structural reforms on economic growth,” it said at the time.

S&P, meanwhile, affirmed the long-term foreign currency debt rating at ‘BB+’ and long-term local currency debt rating at ‘BBB-’ with a negative outlook. While Fitch affirmed South Africa’s long-term foreign and local currency debt ratings at ‘BB+’ with stable outlook.

Fitch is expected to release its ratings with regards to South Africa next week.

At the tabling of the Medium Term Budget Policy Statement (MTBPS) Finance Minister Malusi Gigaba said the country’s economic growth projections have been revised downwards to 0.7% for 2017 from 1.3%. - SAnews.gov.za

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