The global ratings agency most optimistic about South Africa is warning that political tensions and a weak economic climate is putting the country’s credit rating at risk.<\/p>\n
Moody’s on Wednesday (1 February) joined other global ratings firm S&P Global in warning South Africa about its political climate, which is hampering the country’s ability to make the necessary policy changes to spur growth.<\/p>\n
“Political tensions impeded key structural reforms such as comprehensive reforms of state-owned enterprises which are yet to take place and hampered growth, another key credit challenge,”\u00a0the group said.<\/p>\n
Late January, S&P warned that\u00a0slower global growth and domestic weaknesses have dragged down South Africa’s economy, which has disappointed since 2014.<\/p>\n
It noted that the rand\u2019s exchange rate has been volatile, slumping against major currencies, with its relative global share in foreign exchange trading declining over the past three years.<\/p>\n
Meanwhile, the country\u2019s fiscal financing needs-a key rating driver behind our long-term local currency rating have mounted.<\/p>\n
Despite South Africa’s resilience to this downward trend, it is on the edge, with S&P holding the country at a BBB- rating (one notch above junk) with a negative outlook.<\/p>\n
Moody’s has the country at BBB (two notches above junk), while the other major ratings firm, Fitch, is at the same level as S&P.<\/p>\n
All eyes will be on finance minister Pravin Gordhan as he prepares to deliver the country’s budget speech later this month, which will give ratings firms a better idea of how government plans to continue trying to turn things around.<\/p>\n