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Treasury unmoved by ratings downgrade

Sep 27 2012 22:35

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Cape Town - The Treasury was on Thursday unmoved by the credit rating downgrade by Moody's, saying all the reasons the ratings agency cited are already being addressed.

Moody's downgraded South Africa's credit rating by one notch citing concerns about the government's ability to tackle economic problems as well as political jostling.

The Treasury, however, maintained that the issues raised by Moody's were already being addressed through various government programmes.

It also pointed out that "some of the drivers of the downgrade have their roots in the protracted crisis in the Eurozone, South Africa's significant trading partner".

"Government remains committed to taking the necessary measures to lift the growth potential and competitiveness of the South African economy.

"Accordingly, government remains committed to the objectives stated in the 2012 Budget, including: investment in infrastructure to increase the capacity of our networks; strengthening our fiscal buffers by reducing the deficit and stabilizing our debt within the next 2-3 years; instituting a range of measures to improve the competitiveness of the manufacturing sector, including regulatory reforms and a competitiveness; redirecting our exports to countries that show more resilience, such as our continent, China and the rest of East Asia; and Continuing to invest in education and skills development.

"The core of South Africa’s policies remains stable and predictable," the Treasury added in a statement.

Earlier, Investec Asset Management said the Moody's downgrade came as little surprise.

"This downgrade was probably the most expected rating action South Africa has had. Moody's put South Africa on negative watch last November and they have made it well known that it was a serious probability that the downgrade would follow‚" portfolio manager Malcolm Charles said.

The expected impact had already been largely factored in by the market‚ he said.

"It is worth pointing out‚ however‚ that the Moody's rating was one notch higher than that of S&P and Fitch‚ so this downgrade brings their rating in line with the others‚" Charles pointed out.

"This action sends a message that as a country‚ our challenge is to ensure we remain focused on creating an investment friendly environment that creates jobs‚" he added.
moody's  |  economy
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