Business leaders hail Moody’s move to leave credit rating unchanged
THE decision by Moody’s to leave South Africa’s credit rating unchanged at one rung above junk status has received the resounding endorsement of business‚ but with a warning that this window of opportunity should be used to urgently address the country’s socioeconomic challenges.
“While we welcome the decision as reflective of the progress we are making as a country in correcting some of our own goals‚ it is no reason to be complacent,” Business Leadership South Africa chief Bonang Mohale said.
“This decision gives us another opportunity to roll up our sleeves and address the socioeconomic challenges facing our nation.”
He said South Africa’s growth outlook had improved markedly since the beginning of the year‚ with Goldman Sachs and the Organisation for Economic Cooperation and Development upwardly revising their growth forecast for the country.
“The unequivocal message from investors is that South Africa must deal with corruption and fix state-owned enterprises (SOEs). Considerable progress is being made on both fronts.”
The CEO Initiative said Moody’s decision to retain the country’s investment grade rating as well as change South Africa’s outlook from negative to stable offered the country a window to demonstrate its ability to implement the key structural reforms necessary for improving its credit rating.
CEO Initiative co-convenor Jabu Mabuza said: “The decision is largely attributed to the confidence-enhancing measures taken in key areas over the past three months‚ including a smooth presidential transition‚ the appointment of a new board for Eskom‚ the presentation of a fiscally responsible budget and changes to the national executive aimed at restoring stability to key portfolios.”
While the South African economy was still far from operating optimally‚ he said‚ the measures announced in the budget speech‚ along with the undertakings by the president in the state of the nation address‚ were clear indications of the will to achieve the necessary reforms required for inclusive and sustainable growth.
The Banking Association South Africa (BASA) said all South Africans – business and consumers – would benefit from this show of confidence in the progress the country had made in addressing some of the concerns previously raised by the rating agency‚ and in its economy that was beginning to show some growth.
“Another sovereign credit rating downgrade would have inevitably been reflected in the ratings of South Africa’s banks‚ and increased the cost of borrowing for the country‚ companies and financial institutions‚ as well as making it harder to secure essential investment. In the end‚ all South Africans would have felt the burden‚” BASA managing director Cas Coovadia said.
He said recognition must be given to efforts by the national Treasury‚ labour and business leaders. – TimesLIVE