‘Political instability has dented investors’ confidence in SA’

Some economists say while markets were expecting the downgrade by Moody’s, there is the ability to come back into investment grade.

FILE: Picture: EWN.

JOHANNESBURG - Some economists say while markets were expecting the downgrade by Moody’s on the country’s foreign and local currency debt, there is the ability to come back into investment grade and make amends where its required.

Economists have agreed that South Africa’s political instability has dented the confidence of investors in the country.

On Friday evening, the agency announced its decision which follows similar moves by S&P Global and Fitch.

Chief economist Lesiba Mothata says there is the feeling that South Africa is now viewed as a fallen angel.

“In its defining itself as fallen angel that could work best for SA… that’s been helped by global force. We don’t see a sharp fall in the market as it hasn’t happened yet. The creditors suggest that SA has been given an opportunity to make amends.”

At the same time economist Thabi Leoka says since the controversial Cabinet reshuffle by President Jacob Zuma, Moody’s rating is heavily based on the political developments happening in the country.

“The reshuffle was unsettling to many of these ratings agencies and they felt that it undermined a lot of what the previous minister had developed, which they recognised as positive for South Africa.”

(Edited by Zamangwane Shange)