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Moody's maintains rating on NDP progress

Jul 18 2013 12:59 Fin24
pravin gordhan

Finance Pravin Gordhan. (AFP)

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Cape Town - Moody’s Investors Service (Moody’s) has affirmed South Africa's debt ratings, citing among its reasons the adoption of the National Development plan (NDP) in government budgets.

The ratings agency on Wednesday affirmed the government's investment grade credit ratings of Baa1 and maintained a negative credit outlook.

The key drivers for maintaining the government ratings include stricter public spending discipline and the incorporation of the NDP into budget structures.

"Moody's notes that the plan's comprehensive implementation framework and enhanced oversight suggest that progress towards the plan's goals is potentially achievable and are therefore supportive of the Baa1 rating," it said.

The ANC adopted the NDP at its National Conference in December 2012.

Factors maintaining the negative rating outlook were the weakened outlook for the mining sector and continued socio-political pressures on the macroeconomic policy framework.

However, Moody's held out the prospect of a stable outlook.

"Moody's could move South Africa's rating outlook to stable from negative if the government were to maintain its commitment to its spending ceilings, thereby reducing its debt ratios over the medium term."

The Treasury on Thursday said Moody's ratings are a sign of confidence in the government's macroeconomic policy strategies.

"Government has taken proactive measures to address all the key concerns raised by Moody’s and remains committed to implement these measures."  

The Treasury said it is confident that the measures being implemented will in time contribute to improved ratings.

"NDP is a spur to further action in addressing the challenges of faster and more inclusive economic growth, employment, environmental sustainability, redistribution, social cohesion, education, universal health coverage, social protection and regional economic development," it said.

 - Fin24

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moody's  |  ndp  |  sa economy  |  credit ratings
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