Gordhan leads Team SA push overseas
Finance Minister Pravin Gordhan says Moody’s decided to put South Africa under review before meeting his delegation.
|||Johannesburg - Be nice to the ratings agency when they come to check up on South African Inc next week; your country’s future may depend on you.
Finance Minister Pravin Gordhan is in the US, leading a Team South Africa lobby to persuade ratings agencies that South Africa is an investment-grade destination.
Yesterday Moody’s, one of the three big agencies, said it had put South Africa on review for a ratings downgrade.
Read: 'We have never broken a fiscal promise'
“Downgrades are not nice, reputationally and practically, particularly if we follow countries like Brazil and move into junk or sub-investment grade,” Gordhan told Talk Radio 702 this morning.
Gordhan was in London for two days, meeting investors and the three ratings agencies, explaining South Africa's Budget and outlook. Today he’s in Boston, US, then he heads to New York.
“In New York, we’ll be a delegation of government, business and the three trade federations, Cosatu, Fedusa and Nactu, who have sent senior representatives to be part of Team South Africa as we talk to investors,” said Gordhan.
In London, Moody’s told the team they had put South Africa under review with a view to downgrade it.
“What that means is that they currently have South Africa two grades above what we call sub-investment grade,” said Gordhan.
“They have certain questions in their minds and they took this decision last Friday before we met them. And they will be visiting South Africa between March 16 and 18 to meet various stakeholders and get relevant information that will influence them either not to downgrade us, or to downgrade us as a result of the judgment call they make.”
This morning the National Treasury, which Gordhan heads, said during the visit Moody’s was expected to “assess the views of various stakeholders in government, civil society, labour and in the private sector” on whether the decline in South Africa’s economic strength would be reversed in the medium term, whether sufficient progress could be made to “stabilise and restore fiscal strength” and whether policy was likely to lead to a reversal in the continuing erosion of the government’s balance sheet.
The Treasury will highlight collaborative actions to accelerate inclusive growth, measures to accelerate fiscal consolidation, steps taken to reinforce stable industrial relations, the R870 billion infrastructure programme, progress in sorting out electricity constraints and the situation of state-owned entities.
“As a resilient nation we are working together, civil society, labour, business and government, to demonstrate our commitment to translate our plans into concrete actions,” said the Treasury.
In the ratings warning, Moody’s said: “The decision to place the ratings on review was prompted by the continuing rise in risks to the country’s medium-term economic prospects and fiscal strength, notwithstanding the tighter fiscal stance undertaken in the 2016/17 Budget.
“The review will allow Moody’s to assess to what extent government policy can stabilise the economy and restore fiscal strength in the face of heightened domestic and international market volatility.”
louise.flanagan@inl.co.za
THE STAR