Gordhan to showcase SA's 'phenomenal positives' to rating agencies
Johannesburg – There are “phenomenal positives” to focus on in South Africa, and the country has a good story to tell, said Finance Minister Pravin Gordhan.
Gordhan was speaking at a briefing about the economy at Deloitte on Friday. During his address Gordhan said Treasury would be conducting a post-budget roadshow in the UK and the US from next week. Besides trying to secure portfolio and economy investors, Gordhan said Treasury would be meeting with ratings agencies to address questions and concerns they may have.
“At this point in time we have a good story to tell as South Africa,” said Gordhan. If the country continues to move in the “right direction” and if role players cooperate, it will be reflected in growth numbers.
He explained this collaboration between government, business and labour was critical in avoiding a credit downgrade last year. “[It is] one indicator we are capable of working with each other,” he said.
The process with the National Economic and Development Council led by Deputy President Cyril Ramaphosa, where several agreements were reached to ensure stability in labour, is “proof” that consensus can help South Africans deal with key issues. Gordhan added that the dialogue and hard work may take a bit of time.
Following the National Budget, Moody’s raised concerns over government debt guarantees to state-owned enterprises.
In a report Zuzana Brixiova, senior analyst and lead sovereign analyst for South Africa, explained although government guarantees relative to GDP are expected to stabilise, there are drawdowns which pose a risk to the fiscal position.
In November last year, Moody’s kept South Africa’s sovereign rating unchanged at Baa2 with a negative outlook.
Moody's warned that if South Africa doesn't accelerate economic growth, the country risks being downgraded.
The ratings agency is expected to make a decision on the sovereign credit rating on April 7.
Moody’s previously warned that political infighting could result in a sovereign downgrade, Fin24 reported.
Standard & Poor’s and Fitch both have South Africa at BBB- with a negative outlook, this is one notch above junk status.