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‘Credible’ plan to reform Eskom could help SA avoid junk status, MPs told

Moody’s is the only one of the three big rating agencies that still has South Africa at investment grade, with a stable outlook.

Picture: EWN.

CAPE TOWN - Treasury says South Africa could avoid a credit rating downgrade if it can move rapidly on implementing a credible plan to restructure Eskom.

Moody’s is the only one of the three big rating agencies that still has South Africa at investment grade, with a stable outlook.

Cabinet says efforts to ensure the power utility’s sustainability are underway in earnest.

But answering questions from Members of Parliament’s finance committee on Friday, Treasury made it clear there is still a lot of uncertainty about just how much financial support Eskom will need.

Moody’s is due to announce its rating review of South Africa at the end of March.

Avoiding relegation to junk status depends on the plan to reform Eskom, says the acting head of Treasury’s budget office Ian Stuart.

“Our sense is that if the plan is credible, and we can move on it, then we should be able to maintain our credit rating.”

Stuart says this will show the government is confronting and dealing with the major fiscal challenge to the economy and public finances.

It’s not clear yet, however, just how much money Eskom will need.

“The best estimate we have currently is that balance sheet support that they require is about R150 billion, and we’ve chosen to amortise that over 10 years [at R23 billion a year].”

(Edited by Zamangwane Shange)

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