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Timing of Mboweni's economic reform plan has nothing to do with Moody's - Treasury DG

Aug 29 2019 05:25
Lameez Omarjee, Fin24

A new economic policy paper released by Treasury is not final state policy but rather a discussion paper, Director General Dondo Mogajane has told journalists. 

In the 77-page document released on Tuesday afternoon, Treasury called for a series interventions and reforms to "reverse the downward trend in South Africa’s growth potential" and boost the growth rate by up to 3%. The paper includes proposals to speed up of the auction of spectrum, to reintroduce a law to cut down on red tape, to simplify onerous visa regulations, and for Eskom to consider selling coal-fired power stations.  

Speaking to journalists on the sidelines of a briefing to the Standing Committee on Appropriations on Wednesday, Mogajane said the timing of the document's release had "nothing to do with Moody's".

The global rating agency previously said that government's bailout plan for debt-laden power utility Eskom would have negative implications for the sovereign's credit rating.

Moody's is the sole major rating agency to still assess SA's sovereign debt at investment grade, after competitors Fitch Ratings and S&P Global downgraded the country's credit rating to junk in 2017. If Moody's were to downgrade SA again, the country would be ejected from the major Citi World Government Bond Index, forcing asset managers to sell billions of rands' worth of SA bonds

Not about Moody's 

On Wednesday Mogajane said that government issued the discussion paper so that it could inform October's Medium Term Budget Policy Statement, or mini budget. 

He said Treasury had engaged with other ministers and director generals of departments for input. Public comments will also be considered by Treasury before another draft will be issued to Cabinet to make its adjustments.

"It is a discussion paper, and let it be that," Mogajane said, adding the document shows the government has been hard at work to find ways to boost economic growth.



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