A step-by-step look at what will happen if Moody’s downgrades SA to “junk”

(Click here for more from "The Money Show".)

Moody’s has placed South Africa on a downgrade review.

Do we know what will happen if they decide to downgrade our credit rating to “junk”?

We can learn from Brazil where exactly that happened.

The Money Show’s Bruce Whitfield interviewed Dr. Lyal White, Director at the Centre for Dynamic Markets at the Gordon Institute of Business Science.

White discussed the step-by-step consequences Brazil experienced after its downgrade.

Scroll down for quotes from the audio below.

Brazil has experienced these downgrades frequently in the past.

Dr Lyal White

A downgrade will see our currency and stock market tumbling, just as it happened in Brazil.

Dr Lyal White

A downgrade will increase the cost of capital. Everything will, typically, get more expensive.

Dr Lyal White

Our debt has increased dramatically in the past few years. A downgrade will cause the servicing of this debt to be more expensive.

Dr Lyal White

The Finance Ministry has to send a message to the ratings agencies that we will change course.

Dr Lyal White

A few years ago Brazil had full employment. Now we’re seeing an increase in unemployment.

Dr Lyal White

The biggest impact in Brazil was political. The Brazilian president is now fighting off impeachment.

Dr Lyal White

Subscribe to our Business Wrap Newsletter


Recommended

by NEWSROOM AI
Read More
South Africa can have cheap electricity, forever! – former Eskom engineer

South Africa can have cheap electricity, forever! – former Eskom engineer

The Money Show’s Bruce Whitfield interviews Dr Tobias Bischof-Niemz, CEO at ENERTRAG South Africa.

'Drop shipping' - the shady side of connecting buyers with sellers on the web

'Drop shipping' - the shady side of connecting buyers with sellers on the web

The web was supposed to connect buyers to sellers, but not like this.

Meet Sandile Shabalala, CEO of black-owned and controlled TymeBank

Meet Sandile Shabalala, CEO of black-owned and controlled TymeBank

TymeBank has no branches and no monthly fees. Most transactions are free. Bruce Whitfield interviews its CEO.

Buying a used car? New app sends mechanic to inspect it before you decide

Buying a used car? New app sends mechanic to inspect it before you decide

Hanru Reyneke is on a mission to disrupt the used-car industry in South Africa by providing peace of mind to punchdrunk consumers.

Will Pravin Gordhan's budget save SA from downgrade?

Will Pravin Gordhan's budget save SA from downgrade?

Finance Minister is set to table the 2016 budget, which some commentators say is the country's toughest one in decades.

Pravin Gordhan meets with 60 CEOs about how to avoid a ratings downgrade

Pravin Gordhan meets with 60 CEOs about how to avoid a ratings downgrade

The Money Show’s Bruce Whitfield interviewed Peter Bruce, Editor-in-Chief of Business Day and Financial Mail.

Popular articles
South Africa can have cheap electricity, forever! – former Eskom engineer

South Africa can have cheap electricity, forever! – former Eskom engineer

The Money Show’s Bruce Whitfield interviews Dr Tobias Bischof-Niemz, CEO at ENERTRAG South Africa.

Meet Sandile Shabalala, CEO of black-owned and controlled TymeBank

Meet Sandile Shabalala, CEO of black-owned and controlled TymeBank

TymeBank has no branches and no monthly fees. Most transactions are free. Bruce Whitfield interviews its CEO.

Buying a used car? New app sends mechanic to inspect it before you decide

Buying a used car? New app sends mechanic to inspect it before you decide

Hanru Reyneke is on a mission to disrupt the used-car industry in South Africa by providing peace of mind to punchdrunk consumers.

What are the rules and regulations when it comes to owning a generator?

What are the rules and regulations when it comes to owning a generator?

A listener on the Afternoon Drive has shared his frustrations with a neighbor's noisy generator and the health risks it posed.

SA second most stressed nation in the world - Here's what you can do about it

SA second most stressed nation in the world - Here's what you can do about it

Health and Performance Educator and Consultant, Richard Sutton discusses methods for de-stressing.

[LISTEN] The concept behind The Leonardo - Sandton's new skyscraper

[LISTEN] The concept behind The Leonardo - Sandton's new skyscraper

The Leonardo in Sandton may become the tallest building in Africa.

'I want the world to know that Mandla was using my daughter for his own gain'

'I want the world to know that Mandla was using my daughter for his own gain'

Reverend Mbongeni Simelane says it has been a difficult time for his family after the abuse of Bongekile 'Babes Wodumo' surfaced.