Potentially encouraging. But it also seems a reach for a country that was unable to gain sufficient traction on reforms through the eight years of persistent warnings from ratings agencies that continued to downgrade. That, unfortunately, placed SA on a weak footing to begin with. But even the first two years of Cyril Ramaphosa’s presidency haven’t provided sufficient government support for the National Treasury to place the country on a path of debt stabilisation.
The challenge with an emerging market that moves deeper into junk territory is that the prospect of climbing out becomes more remote. Put another way, the often unpopular political effort required to achieve two or more rating upgrades is something most governments do not have a political appetite for.As such, the requisite discipline countries would need to adhere to, to maintain higher sovereign ratings, typically falls by the wayside.
SA has a clear advantage in that its institutional strength, in the ratings methodology, scores two notches above investment grade. This means strong institutions should push the government harder to accelerate reforms to improve the economic growth outlook given that this is the cheapest way to reduce the funding costs of a subinvestment-grade rating.
The SA Reserve Bank has already agreed to purchase government bonds in the secondary market, but only to ease dysfunctional markets. The Bank has been painfully clear that this is not an attempt to reduce yields , nor is monetary policy non-functioning. The risk, however, is that if lower interest rates encourage issuance of short-dated bonds at lower borrowing costs, a greater refinancing risk could emerge if the government cannot improve the economic growth outlook.
Herein lies the biggest test yet: though SA benefits from investment-grade institutional strength within its junk rating, this is exactly what the country risks losing if the government can’t find a way to improve the economic growth outlook to stabilise debt.
here we go, 1652's are at it again. right things means not repossessing stolen land.🙄
This has become so irrelevant in the current economic climate and lock down why you even wasting time predicting the future. It’s about survival now .....Moody’s “se moer “
I thought Zimbabwe would improve but without investment and a free market it will not happen.
I know south africa has the ability, whe are the land of the rising sun, let's be positive south africa, I know we can do it its time for us to create a new south africa and let's not hold any grudges, get rid of social differences throughout our wonderful country
Lets hope that ideological obstinacy is blown out of the system allowing a surge of creative excellence to restore a nation we can be proud of.
Unathi_Kwaza As if
It won’t though.
Doing the right thing is not in the ANC's DNA. Prove me wrong!
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