South Africa likely to avoid Moody's downgrade - Economist

South Africa is bracing itself for the latest Moody's announcement on Friday when it will learn whether the ratings firm has decided to keep its sovereign debt one notch above junk status.

Moody's is expected to release its credit rating review after markets close on Friday afternoon.

Economist Sam Roland says Moody's is likely to refrain from a downgrade based on the country being under new leadership.

Efforts have been made to minimise over reliance on inefficient state-owned enterprises

Sam Roland, Economist at Econometrix

I think one of the key things a lot of markets are looking at is what sort of language Moody's uses when they discuss our outlook, which is currently at negative.

Sam Roland, Economist at Econometrix

Roland says previous uncertainty on the political front was causing a great deal of economic headwind, but recent changes, including the axing of Malusi Gigaba as Finance Minister and Sars commissioner Tom Moyane' suspension, is seen as positive by the ratings agency.

Another thing is the appointment of Pravin Gordhan as Minister of Public Entreprise. This is something that will likely instill confidence in the rating agencies.

Sam Roland, Economist at Econometrix

Certainly the situation has improved and I think overall will cause Moody's to stay a decision to downgrade.

Sam Roland, Economist at Econometrix

To hear the rest of the interview with Sam Roland, listen below:


This article first appeared on CapeTalk : South Africa likely to avoid Moody's downgrade - Economist


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