What's in a downgrade? Economist Lesiba Mothata explains

Monday night’s downgrade by credit ratings agency S&P Global has left South Africans with many questions.

Read: South Africa downgraded to junk status

Economist Lesiba Mothata says the decision to downgrade the country should not be dismissed.

He explains that the junk rating will affect the country's ability to do the following:

  • spend on and improve infrastructure
  • pay civil servants for their services
  • create more education

Mothata explains that when the country has to borrow money, foreign investors want to understand the quality of credit that they get involved in, particularly as South Africa stands with a current account deficit.

The trade deficit means that the value of imports of goods, services and investment incomes is greater than the value of exports.

Also read: Moody's playing wait and see game says economist

He advises that South Africa is not in the position to take the junk rating lightly.

It's only when that we you have a surplus on your current account and zero debt that one can begin to say we don't need credit ratings agencies.

Lesiba Mothata, Chief Economist at Investment Solutions

The trajectory of ratings is very concerning... Between now and Friday, Fitch Ratings could come up with a decision.

Lesiba Mothata, Chief Economist at Investment Solutions

Take a listen to Mothata explain the implications:


This article first appeared on CapeTalk : What's in a downgrade? Economist Lesiba Mothata explains


702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Markets not badly affected by downgrade - analyst

Markets not badly affected by downgrade - analyst

Standard & Poor's downgraded South Africa's credit rating to junk status or double B plus but markets factored in the inevitable.

What being downgraded to junk status really means

What being downgraded to junk status really means

Wits Professor Patrick Bond and Financial Mail's Sikonathi Mantshantsha share their insights into the latest S&P downgrade.

What happens to economies when downgraded (It doesn't look good for SA)

What happens to economies when downgraded (It doesn't look good for SA)

Standard Bank Chief Economist, Goolam Ballim, says it won't be easy for South Africa to survive the consequences of a downgrade.

Junk status not really a surprise - analyst

Junk status not really a surprise - analyst

Following recent leadership changes in government, investment analyst says it is not surprising that the country is downgraded.

SA junk status is treason against the poor- economist

SA junk status is treason against the poor- economist

International rating agency, Standard & Poor’s, has downgraded South Africa's credit rating to junk status.

‘Treasury [the new team] doesn’t acknowledge that we have a problem’

‘Treasury [the new team] doesn’t acknowledge that we have a problem’

Arabile Gumede interviews KPMG Senior Economist Christie Viljoen.

South Africa downgraded to junk status

South Africa downgraded to junk status

The rating change by Standard & Poor;s follows the announcement of President Zuma's Cabinet reshuffle

S&P reshuffles South Africa's credit rating to junk

S&P reshuffles South Africa's credit rating to junk

The rating agency says the decision was taken on the back of political and institutional uncertainty.

Popular articles
Dr Mbuyiseni Ndlozi opens up about his thesis

Dr Mbuyiseni Ndlozi opens up about his thesis

Ndlozi explains the significance of the the first chapter of his thesis: 'Trauma in the archives'.

German prosecutors probing Steinhoff CEO Markus Jooste (for accounting fraud)

German prosecutors probing Steinhoff CEO Markus Jooste (for accounting fraud)

The Money Show’s Bruce Whitfield interviews Steinhoff International Chairperson Christo Wiese.

So what exactly is radical economic transformation?

So what exactly is radical economic transformation?

Wits associate professor of economics Christopher Malikane speaks to Azania Mosaka about the term that is being bandied about.

Is it normal to have a curved penis? Dr Shingai explains

Is it normal to have a curved penis? Dr Shingai explains

Urologist Dr Shingai Mutambirwa says penile curvature is only a concern if it impedes a man's ability to have penetrative sex.

Who is Advocate Tembeka Ngcukaitobi?

Who is Advocate Tembeka Ngcukaitobi?

The EFF lawyer stole the show during the state capture report court battle.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...

Blesserfinder: Matching you with a sugar daddy near you

Blesserfinder: Matching you with a sugar daddy near you

Is social trend Blesserfinder, where girls are allegedly matching up with rich 'benefactors' in exchange for sex, a real thing?