SA business welcomes Moody's reprieve, urges govt to effect economic reforms
Business Unity South Africa (Busa) has urged the government to effect urgent economic reforms after Moody's Investors Service deferred a review of the country's Baa3 rating which had been expected on Friday.
This means South Africa stays one notch above sub-investment grade with a stable outlook until the ratings agency's next review in November.
Busa chief executive Tanya Cohen said the Moody’s reprieve was an opportunity to institute urgent reforms, including establishing political stability and a credible plan for struggling state-owned enterprises, among others.
"This is a welcome reprieve and ensures that South Africa will remain in the Citigroup World Bond Index, a key instrument which will enable the government to continue raising much needed liquidity in the capital markets," Cohen said in a statement.
"SA Inc ought to take this as an opportunity to get its fiscal house in order and its policies aligned to a pro-growth and confidence-inspiring economic strategy."
Cohen said the five focus areas that Busa viewed as critical for South Africa to retain its investment grade sovereign credit rating were political stability, policy certainty, the reform of state firms, structural reforms and a credible growth roadmap.
This is the second time in a row that Moody’s has postponed an pronouncement on the country’s rating. It did not give reasons for the decision.
Peers S&P Global and Fitch downgraded South Africa to non-investment grade in 2017.
A similar move by Moody’s would have hurt South Africa’s embattled economy and undermined President Cyril Ramaphosa’s drive to attract $100-billion in investment over the next five years.
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