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Moodys downgrades SA

Moodys

Credit rating agency Moodys Investors Service has downgraded South Africa’s credit rating one notch from Baa1 to Baa2, while also revising the credit outlook from negative to stable, said National Treasury.

Moody’s decision keeps South Africa’s rating in investment grade.

“Government notes Moody’s decision and recognises that economic growth has slowed down and there is a need to implement growth-inducing initiatives. The Medium Term Strategic Framework prioritises initiatives that will boost investment including major projects in rail, energy and ports.

“Furthermore, focus in the medium term will be on accelerating the structural changes that are already underway and whose impact will support economic growth,” said Treasury on Thursday.

The rating agency said the investment grade rating was a reflection of several factors including highly advanced infrastructure compared with most other emerging markets and institutions most notably the judiciary that are stronger than many of its peers.

Moody’s said its decision to change the outlook to stable reflects South African policymakers’ commitment to reining in government debt growth over the medium term and the broad political support for a macroeconomic strategy, including the National Development Plan, tighter monetary policy and fiscal restraint, which should help stabilise the debt burden over the medium term.

The ratings agency’s decision to assign a stable outlook to the current ratings affirms government’s commitment to fiscal discipline, which was reinforced by the recently published Medium Term Budget Policy Statement.

“Government is committed to narrowing the budget deficit, stabilising debt and rebuilding the fiscal space that enabled South Africa to escape the worst effects of the global economic crisis.”

Government will continue to make the tough decisions that are necessary to address challenges “so we can build on the gains we have made over the past 20 years to improve the lives of our people”. – SAnews.gov.za

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