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Moody’s downgrade: ANC has a plan to trigger positive credit ratings

Jun 10 2017 11:30
Matthew le Cordeur

Cape Town – The African National Congress (ANC) reacted to the latest ratings downgrade by pledging to resolve policy uncertainty at its two party conferences this year.

Moody’s on Friday downgraded the country’s long-term foreign and local currency debt ratings by one notch from Baa2 to Baa3, with a negative outlook, keeping it at investment grade.

“The ANC remains committed to transparency and inclusivity in the process of assessing and, if necessary, reviewing policy towards the organisation’s Fourth National Policy Conference and 54th National Conference scheduled for June and December 2017 respectively,” it said in a statement on Saturday.  

“We have confidence that where any uncertainty or ambiguities still remain in terms of the ANC’s policy framework, these will be settled decisively by these important gatherings of our people.

“We are confident also that the outcomes of these gatherings will result in an improved investment climate and should trigger a positive review in the coming months,” it said.

FULL STATEMENT: Moody's downgrades SA

Moody’s said on Friday that the key drivers for the downgrade were:

•    the weakening of South Africa's institutional framework;
•    reduced growth prospects reflecting policy uncertainty and slower progress with structural reforms; and
•    the continued erosion of fiscal strength due to rising public debt and contingent liabilities says its policy review will trigger ratings boost

On Friday, National Treasury warned that the negative outlook “indicates that the risk of further downgrades is still there”.

The ANC joined National Treasury, the CEO Initiative and the Banking Association of South Africa in calling on government, the private sector and organised labour to use this latest downgrade as a catalyst for greater urgency in working to alter our economic trajectory and boost confidence in our economy.

READ: CEOs warn against populist rhetoric as Moody’s downgrades SA

“In particular, we call on the social partners to work together to expand private sector investment in the local economy, continue to maintain the stable labour relations environment, remain focused on government’s programme of fiscal consolidation and strengthen governance in the state owned companies and state institutions in general,” the ANC said.

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