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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

South Africa upbeat about retention of credit ratings

JOHANNESBURG South Africa (Xinhua) -- Despite concerns over its fiscal targets, South Africa is hoping that it can avert a credit rating downgrade, Deputy Finance Minister Mcebisi Jonas said Thursday.

“A lot of work has been done and put into the ratings agencies story and I think that we have a firm proposition,” Jonas told reporters.

The official said he is hopeful of a turnaround of the economy in the year and noted that there is a general consensus across the board to boost the economy.

The credit rating agencies have warned of a possible downgrade by the end of the year because of South Africa’s underperforming economy with over-expenditure and a worrying political situation.

Standard & Poor’s has already landed in South Africa for its review, which will be published before the end of the year.

The credit rating agencies were concerned about the government’s ability to maintain fiscal targets, but the South African Treasury had convinced them that it could maintain caps on spending, said Jonas.

“We need to improve growth, we need to ensure that we stick to the fiscal path that we have taken as a country.”

Jonas emphasized the importance of maintaining the current ratings, as a downgrade will have devastating implications.

The deputy minster also noted that nepotism and corruption are undermining efforts for a credible government.

“Leadership that looks beyond its own narrow confines is needed,” said Jonas, who has been an outspoken critic of government graft. In October, he said: “Corruption is real, it’s palpable, you can feel it.”

South Africa’s political elite have been involved in a slew of corruption scandals, which have eroded the trust of investors and weighed on Africa’s most industrialized economy.

Last week, President Jacob Zuma survived a parliamentary no-confidence vote over allegations of influence peddling, one of several scandals involving him since taking office in 2009.

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EARLIER REPORT:

South Africa cabinet vows to protect investment status

CAPE TOWN South Africa (Xinhua) -- The South African cabinet on Thursday vowed to protect the country’s investment status as the country’s credit rating is at the risk of being downgraded by international rating agencies.

“Cabinet calls on all sectors to join government in a united front to protect our country’s investment status,” Minister in the Presidency Jeff Radebe said at a press briefing in Cape Town after a fortnightly cabinet meeting.

The meeting discussed, among others, issues relating to efforts to avoid a further downgrade of South Africa’s credit rating.

International ratings agencies Moody’s, Fitch and Standard & Poor’s will in the coming weeks announce their decision on the country’s investment rating grade.

Moody’s has warned that it would downgrade South Africa’s rating if its economic growth fell below its estimated growth of 0.2 percent this year.

Moody’s currently rates South Africa two notches above sub-investment grade at Baa2 with a negative outlook, while Fitch and Standard and Poors rate the country one notch above sub-investment status.

Moody’s expects South Africa’s growth to tick up to 1.1 percent in 2017 and 2.0 percent the year after. Its next review of South Africa is expected on Nov. 25.

The rating agencies say political infighting, weak economic growth and mounting debt at state-owned companies all pose a downward risk.

Economists say a further downgrade would plunge South Africa into recession.

             

 

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