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Economists: SA can avert a permanent downgrade

Ratings agency Moody’s has changed South Africa's credit rating outlook to ‘negative’.

Picture: Christa Eybers/EWN

JOHANNESBURG - Economists say despite Moody's decision to change South Africa's credit rating outlook to 'negative', there's still an opportunity under the new leadership of Finance Minister Pravin Gordhan to avert a permanent downgrade.

The ratings agency has maintained the country's investment grade at the second lowest, one level above the ranking of Standard & Poor's and Fitch.

The National Treasury has responded to the credit rating company's move by saying Gordhan's reappointment will ensure policy continuity.

Economist Chris Hart says South Africa has a sound financial system and should not be too concerned about its credit rating next year.

"We can actually turn it around, but if we carry on with the currency trajectory, we'll be facing the actual downgrade later."

He says any decision on another downgrade in 2016 will all depend on Gordhan's budget.

National Treasury's Phumza Macanda says the entire country - and not only Gordhan - is responsible for ensuring the country is not downgrade again.

"From what I have seen Gordhan is committed to coming in and contributing to that."

But Macanda believes South Africa's credit rating should not be a cause of concern for South Africans.