Gigaba: Meeting with Moody's was robust and constructive

Washington - Finance Minister Malusi Gigaba said he had "constructive" talks with Moody’s Investors Service in an attempt to tackle the credit rating agency’s concerns about fiscal policy after a surprise Cabinet reshuffle that saw the ouster of his predecessor.

Moody’s placed South Africa on review for a downgrade after the firing of Pravin Gordhan last month raised questions about the country’s political stability and whether the government was committed to fiscal discipline.

S&P Global Ratings and Fitch Ratings have already cut South Africa’s credit rating to junk.

Gigaba, speaking in an interview in Washington on Friday, said the government is working to restore the investment-grade rating, which would help bolster investor confidence and lower borrowing costs.

The downgrade was a result of uncertainty about policy rather than a reflection of economic weakness, he said.
"We’re not panicking," he said. "We take seriously what has happened."

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The meeting with Moody’s was "robust", the minister said. "They asked us difficult questions. It was also a constructive engagement." The agency is sending a team to South Africa in May, "and we are going to sit down with them and talk further about a whole range of things," Gigaba said.

Gigaba is in charge of reviving an economy that the World Bank expects to expand less than 1% for the second year in a row. He’s also pledged to maintain fiscal discipline in an attempt to meet the budget deficit target of 3.1% of gross domestic product this year.

"At the present moment, we are committed to that. We’re going to do everything we can to improve the situation, to attract investments," he said. "We have to deal with the issues, but within the fiscal ceiling we have set ourselves."