Moody’s explains why it didn’t junk South Africa, and why it may next time

The event-risk is an attempt to change Eskom in a manner that sets off a catastrophic labour response… It’s a difficult and scary moment for us… They rate it as a very serious risk…

Nic Borain, political economist

Moody’s will come down on us like a ton of bricks if we don’t find ways to increase generation or, at least, get the private sector involved in generation at Eskom.

Nic Borain, political economist

Moody's Investors Service on Friday announced that it’s not downgrading South Africa’s sovereign rating.

Uncharacteristically, it left it at that.

On Monday, however, it released a detailed report into the country’s credit rating.

Moody’s decided to cut South Africa some slack because of its “diversified economy, a sound macro-economic policy framework and a deep pool of domestic investors”.

The agency rates South Africa’s fiscal strength as “moderate" and its susceptibility to event risk as “low”.

It expects economic growth of 1.3% this year.

Moody’s is worried, however, about rising government debt and the country’s ailing state-owned companies, chiefly Eskom.

The Money Show’s Bruce Whitfield interviewed political economist Nic Borain.

Listen to the interview in the audio below (and scroll down for more quotes from it).

All of them [rating agencies] have a very strict and reproducible methodology…

Nic Borain, political economist

They said that not enough has changed in the metrics they look at to change either the outlook or the review…

Nic Borain, political economist

They did not quite say things didn’t get worse… Many of the figures are worse than expected. But the metrics are not different from other countries [with the same rating as SA]…

Nic Borain, political economist

It’s suspected that Moody’s are encouraging us politically. They will deny it… They’ve gone for a wait-and-see view…

Nic Borain, political economist

Enjoy The Money Show, but miss it sometimes?

Get the best bits emailed to you daily, right after it ends:

Subscribe to our Business Wrap Newsletter


This article first appeared on 702 : Moody’s explains why it didn’t junk South Africa, and why it may next time


Recommended

by NEWSROOM AI
Read More
South Africa is flirting with recession. Again. How to 'create your own economy'

South Africa is flirting with recession. Again. How to 'create your own economy'

The timing could not be better to create your own economy, says small business guru Pavlo Phitidis.

2 out of 5 MPC members wanted to cut rates. Lesetja Kganyago said, 'No!'

2 out of 5 MPC members wanted to cut rates. Lesetja Kganyago said, 'No!'

Inflation is low; the economy is weak. But Lesetja Kganyago is taking no chances, says FNB's Mamello Matikinca-Ngwenya.

Enjoy life and save for the future by splitting income using the '50/15/5 rule'

Enjoy life and save for the future by splitting income using the '50/15/5 rule'

You only live once — personal finance guru Warren Ingram on divvying up your income if you're not the budgeting type.

You can now apply to generate electricity and feed it into the grid

You can now apply to generate electricity and feed it into the grid

The change comes after Energy Minister Jeff Radebe told the National Energy Regulator of SA to license applications to do so.

'Thuli Madonsela’s name has been mentioned for Deputy President'

'Thuli Madonsela’s name has been mentioned for Deputy President'

Lumkile Mondi (Wits), Ferial Haffajee and Busisiwe Mavuso (Business Leadership SA) on the President's upcoming "slim" Cabinet.

Former Morning Live co-anchor Tracy Going opens up, gets vulnerable about money

Former Morning Live co-anchor Tracy Going opens up, gets vulnerable about money

Former Morning Live co-anchor Tracy Going opens up about her attitude to money (hopes and fears, successes and failures, etc.).

Popular articles
Former Morning Live co-anchor Tracy Going opens up, gets vulnerable about money

Former Morning Live co-anchor Tracy Going opens up, gets vulnerable about money

Former Morning Live co-anchor Tracy Going opens up about her attitude to money (hopes and fears, successes and failures, etc.).

'Two officers jumped out of the car and started assaulting me'

'Two officers jumped out of the car and started assaulting me'

Graham Westcott tells Kieno Kammies about how the police allegedly attacked him in Sea Point, Cape Town.

[WATCH] Twin toddlers climbing a fridge has Twitter in stitches!

[WATCH] Twin toddlers climbing a fridge has Twitter in stitches!

Khabazela shares tweets and Facebook posts that have gone viral.

Boeing 737 MAX: 'Sensor broke off, computer misread data and fought the pilots'

Boeing 737 MAX: 'Sensor broke off, computer misread data and fought the pilots'

Guy Leitch, the managing editor of SA Flyer Magazine, provides insights into what caused the airplane crash.

'Thuli Madonsela’s name has been mentioned for Deputy President'

'Thuli Madonsela’s name has been mentioned for Deputy President'

Lumkile Mondi (Wits), Ferial Haffajee and Busisiwe Mavuso (Business Leadership SA) on the President's upcoming "slim" Cabinet.

Four men die after inhaling hazardous fumes in Cape Town factory

Four men die after inhaling hazardous fumes in Cape Town factory

Police are investigating the deaths which took place at Atlantic Recycling factory in Parow on Tuesday afternoon.