South Africa is hopeful of retaining a favourable credit rating, with Moody’s due to release its sovereign rating review report for Africa’s southernmost tip country.
Speaking to SAnews, Trade and Industry Minister Dr Rob Davies said the country has held several engagements with rating agencies, including Moody’s, to brief them on efforts being made to move the country forward.
“There have been a number of engagements with the rating agencies, including Moody’s, around what we are trying to achieve. What we’ve been trying to persuade the rating agencies on is that [we have a] programme of addressing the evident problems we have and solutions are being worked on,” said Davies on Thursday.
Among the challenges the Minister touched on are that of power utility Eskom, which has had to implement load shedding as a result of capacity constraints, among others.
The Minister also alluded to South Africa’s ability to maintain the coherence of the Budget.
“I think that many messages have been conveyed to Moody’s in that regard. Now we hope that they will give us credit for that and that we will continue to be an investment grade [country].
“We have our fingers crossed. We will see what their decision is tomorrow,” said Davies.
The rating agency -- which is the only one among the major three to have kept South Africa’s credit rating at investment grade -- is expected to announce its decision on South Africa's credit rating on Friday.
Briefing media in February prior to tabling the 2019 Budget Speech, Finance Minister Tito Mboweni said there were a lot of positives that could be considered by the ratings agency, including government taking steps to address challenges faced by Eskom and addressing the public sector wage bill.
At the time, Mboweni said, difficult conversations were being held with the agencies.
In a research note earlier this week, Nedbank economists anticipated that Moody’s would keep South Africa’s credit rating unchanged at Baa3.
“They are likely to keep the rating unchanged at Baa3, but might change the outlook from stable to negative on concerns about the rise in the government’s expenditure ceiling, and load shedding, which will put further strain on economic growth,” said the economists.
On Monday, Eskom announced that with the electricity system gradually improving, it was anticipating no load shedding for this week.
It, however, cautioned that that the risk of load shedding remains as the system continues to be vulnerable. – SAnews.gov.za
