With Moody’s Investors Service heading to South Africa’s shores for its yearly review, the National Treasury on Wednesday said it would highlight the key actions taken to avert a possible downgrade.
The ratings agency this week placed South Africa’s respective long- and short-term ratings of Baa2 and P-2 on review for possible downgrade and would, from March 16 to 18, assess the extent to which government policy could stabilise the economy and restore fiscal strength amidst heightened domestic and international market volatility.
“The decision to place the ratings on review was prompted by the continuing rise in risks to the country's medium-term economic prospects and to its fiscal strength, notwithstanding the tighter fiscal stance undertaken in the 2016/17 budget,” Moody’s said in a statement.
The agency would initiate a downgrade should it find that government’s policy and strategy could not reverse the current debt trajectory, if there was evidence of further shocks to growth and if there was lower confidence in policymakers' commitment to fiscal restraint.
“Further deterioration in the investment climate would also place downward pressure on the rating if it undermined medium-term growth prospects and the availability of external financing for the current account deficit.
“More generally, indications that the slowdown in growth will be even deeper and more protracted than currently expected would be negative for the rating,” Moody’s explained.
The agency would, however, confirm the investment grading should it be found that spending restraint would be maintained by policymakers, that there was success in the delivery of planned structural reforms, and that the fiscal consolidation unpacked in the 2016 Budget Review was undertaken.
The National Treasury would unpack what was being done to stabilise the country.
“In our meetings with the agency we will highlight . . . our collaborative actions aimed at accelerating inclusive growth; measures adopted in the 2016 Budget to accelerate fiscal consolidation and to give effect to the National Development Plan; the steps taken to reinforce stable industrial relations; and the accelerated implementation of our R870-billion infrastructure investment programme,” it said in a statement on Wednesday.
Further, the progress made in resolving energy constraints would be highlighted, as well as the initiatives undertaken to implement the recommendations of the Presidential Review Commission on State-owned Companies.
“As a resilient nation we are working together – civil society, labour, business and government – to demonstrate our commitment to translate our plans into concrete actions,” the National Treasury concluded.
With Moody’s Investors Service heading to South Africa’s shores for its yearly review, the National Treasury on Wednesday said it would highlight the key actions taken to avert a possible downgrade.
The ratings agency this week placed South Africa’s respective long- and short-term ratings of Baa2 and P-2 on review for possible downgrade and would, from March 16 to 18, assess the extent that government policy could stabilise the economy and restore fiscal strength against heightened domestic and international market volatility.
“The decision to place the ratings on review was prompted by the continuing rise in risks to the country's medium-term economic prospects and to its fiscal strength, notwithstanding the tighter fiscal stance undertaken in the 2016/17 budget,” Moody’s said in a statement.
The agency would initiate a downgrade should it find that government’s policy and strategy could not reverse the current debt trajectory, if there was evidence of further shocks to growth and if there was lower confidence in policymakers' commitment to fiscal restraint.
“Further deterioration in the investment climate would also place downward pressure on the rating if it undermined medium-term growth prospects and the availability of external financing for the current account deficit.
“More generally, indications that the slowdown in growth will be even deeper and more protracted than currently expected would be negative for the rating,” Moody’s explained.
The agency would, however, confirm the investment grading should it be found that spending restraint would be maintained by policymakers, that there was success in the delivery of planned structural reforms, and that the fiscal consolidation unpacked in the 2016 Budget Review was undertaken.
Now the National Treasury would unpack what was being done to stabilise the country.
“In our meetings with the agency we will highlight . . . our collaborative actions aimed at accelerating inclusive growth; measures adopted in the 2016 Budget to accelerate fiscal consolidation and to give effect to the National Development Plan; the steps taken to reinforce stable industrial relations; and the accelerated implementation of our R870-billion infrastructure investment programme,” it said in a statement on Wednesday.
Further, the progress made in resolving energy constraints would be highlighted, as well as the initiatives undertaken to implement the recommendations of the Presidential Review Commission on State-owned Companies.
“As a resilient nation we are working together – civil society, labour, business and government – to demonstrate our commitment to translate our plans into concrete actions,” the National Treasury concluded.