JSE's Newton-King: Credit rating moves a catastrophic moment for SA

Economists say the decisions mean it’s going to be harder and more expensive for government to borrow money and that there will be less money for government services.

Nicky Newton-King. Picture: AFP.

JOHANNESBURG – The CEO of the Johannesburg Stock Exchange Nicky Newton-King says that the decisions by Standard & Poor’s Global ratings to downgrade South Africa to junk status and for Moody’s to place the country's rating on review for a downgrade is a catastrophic moment for the country.

S&P Global made its announcement on Monday evening while Moody’s released its statement later on the same evening.

Economists say the decisions mean it’s going to be harder and more expensive for government to borrow money and that there will be less money for government services.

Newton-King says this is very bad news for the economy.

“This is a very catastrophic situation for the country. No good comes from a downgrade and I think we must take the warning from Moody’s seriously. Two downgrades put our position in global bonds under threat.”

Meanwhile, economist Thabi Leoka says there were warnings that this would happen.

“They just warned us that they will downgrade us if they felt that the political risks undermine economic policy adoption.”

The Finance Ministry and its new Finance Minister Malusi Gigaba have said that South Africa is committed to a predictably and consistent policy framework and that while the minister at the department may have changed, its policy orientation remains the same.

(Edited by Leeto M Khoza)