South Africa\u2019s government is prioritizing regaining an investment grade rating on its debt as part of its plans to revive a stagnant economy, finance minister Tito Mboweni said.<\/p>\n
Moody\u2019s Investors Service is the only one of the three major credit-rating companies that still assesses South Africa\u2019s debt at investment grade.<\/p>\n
S&P Global Ratings and Fitch Ratings Ltd cut their ratings to junk during former president Jacob Zuma\u2019s tenure which was characterized by political uncertainty due to multiple cabinet reshuffles and corruption scandals.<\/p>\n
“It\u2019s priority number one because we have to get out of the status that we are in and back to proper investment grading and we are working hard at this,” Mboweni said in an interview with Bloomberg TV on the sidelines of the G-20 meeting in Argentina on Saturday.<\/p>\n
\u201cThe change will happen because of the things that we need to do ourselves.\u201d<\/p>\n
While Mboweni said he is not sure how long it will take to recover investment grade status, the main focus for government needs to be on enhancing policy certainty and credibility, lowering debt and showing restraint in fiscal support for struggling state owned companies.<\/p>\n
Back in Business<\/strong><\/p>\n \u201cWe need to demonstrate action around the fiscal stance and the budget standpoint of South Africa and show that we are taking steps to reduce the debt that is accumulating,\u201d Mboweni added.<\/p>\n \u201cWe need to take serious steps to show that we are moving to restructuring the economy and reigniting growth.\u201d<\/p>\n Credit ratings agencies have flagged slow economic growth, embattled state companies and high debt levels as key risks to the country\u2019s debt rating.<\/p>\n Mboweni slashed economic growth forecasts in half for 2018 to 0.7% in his maiden mid-term budget in October after the economy plunged into a recession in the first half of the year.<\/p>\n He also said government debt will peak later and at higher levels than previously anticipated. Gross domestic product hasn\u2019t expanded at more than 2% annually since 2013 and unemployment is at 27.5%.<\/p>\n \u201cWhen we do these practical things, I think the ratings agencies will look at us and say these folks are back in business,\u201d he said.<\/p>\n
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