By Ahmed Areff.
Ratings agency Moody’s has affirmed South Africa’s sovereign’s long-term foreign and local currency debt ratings at “Ba2”, and has maintained its stable outlook on the country.
The National Treasury said on Tuesday night that, according to Moody’s, its decision reflected South Africa’s “credit strengths from effective, core institutions such as the judiciary and the central bank, a robust, deep financial sector and a solid external position”.
“However, the ratings affirmation also acknowledges chronic challenges posed by the country’s inequalities which hamper reform progress and fuel social risk, as well as persistent structural constraints on economic growth, and a relatively high and costly debt.”
Treasury also welcomed an acknowledgement by Moody’s that the government of national unity (GNU) “will pursue structural reforms and ease growth bottlenecks”.
Moody’s decision comes just over two weeks after fellow ratings agency S&P revised South Africa’s outlook from “stable” to “positive” – an indication that the country may be on track for a ratings upgrade.
S&P also acknowledged that the GNU was an impetus for reform that could boost private investment and economic growth.