Government has noted investors service Moody\u2019s decision to revise South Africa\u2019s outlook rating to negative.<\/p>\n
National Treasury said Moody\u2019s indicated that the decision to change the outlook to negative from stable was based on increased probability that growth will remain low for a prolonged period of time due to the structural challenges facing the mining industry and other sectors of the economy.<\/p>\n
The other reason cited by the ratings agency was the rising risk of fiscal slippages in the face of both slower growth and increasing political pressures.<\/p>\n
“Moody\u2019s affirmed South Africa\u2019s government bond ratings (foreign and local) at \u2018Baa2\u2019 respectively citing the country\u2019s track record of sound macroeconomic policies,” the department said.<\/p>\n
Moody’s decision must be seen in the context of weak global growth prospects, a challenging environment for emerging markets and heightened volatility in financial markets, the department said.<\/p>\n
\u201cMoody\u2019s decision to affirm the rating attests to South Africa\u2019s solid history of sound macro-economic policy management, prudent fiscal policy and strong institutions.<\/p>\n
\u201cThis approach to policy has enhanced South Africa\u2019s credibility and will therefore remain government\u2019s focus, the department said.<\/p>\n
The reappointment of Minister Pravin Gordhan as the Minister of Finance will ensure policy continuity.<\/p>\n
\u201cThe Minister has affirmed that government will stay the course of sound fiscal management and focus on fiscal consolidation and debt stabilisation in the medium term.<\/p>\n
\u201cHe assured that any extra expenditure would only be accommodated if extra revenue is raised and any revenue raising opportunity would be carefully considered so as to ensure that it does not damage growth or affect the poor negatively,\u201d the department said.<\/p>\n
The department has committed to addressing Moody\u2019s concerns about a rising risk of fiscal slippage.<\/p>\n
\u201cGovernment is aware that the country\u2019s economic growth performance needs to be improved and thus made the resolution of the energy challenge an immediate priority.<\/p>\n
“Focus is on implementing the National Development Plan, in particular growth-inducing initiatives that include: \u00a0investing in economic infrastructure through public private partnerships \u00a0expanding the independent power producer programme encouraging affordable, reliable and accessible broadband access,” National Treasury said.<\/p>\n
Government is also fast-tracking economic reforms aimed at alleviating the most binding constraints to growth and to build a more competitive economy. The implementation of these reforms will ensure that challenges of poverty, inequality and unemployment are addressed effectively.<\/p>\n
Moody\u2019s says South Africa\u2019s rating outlook is now negative<\/a><\/strong><\/p>\n Gordhan\u2019s appointment changes nothing: Fitch<\/strong> <\/a><\/p>\n South Africa a Banana Republic under Zuma: EFF<\/a><\/strong><\/p>\n