South Africa sweats ahead of Moody's credit rating decision
Moody’s Investors Service is on Friday evening expected to make an announcement on South Africa’s credit rating.
JOHANNESBURG – Moody’s Investors Service is on Friday evening expected to make an announcement on South Africa’s credit rating.
Moody’s will take into account the general health of the economy, growth prospects, and the effects the power crisis could have.
The global ratings agency could do one of four things on Friday:
It could release an outlook update saying that the future looks about the same for the South African economy.
Or it might downgrade the outlook to negative, which FNB chief Economist Mamello Matikinca-Ngwenya believes is a distinct possibility.
“The possibility of a negative outlook is very high,” she said.
Moody’s third option is a full-blown downgrade to sub-investment level. That would be very bad news for the economy and could trigger a cascade effect that will hurt investment, curb growth, and cull jobs.
Government is hoping that Moody’s will give the country a break and economist Azar Jammine thinks they might.
“I think Moody’s will be relatively forgiving in allowing us the space to do enough to prevent a downgrade after elections.”
Moody’s fourth option is to do absolutely nothing and say nothing which would leave South Africans anxiously awaiting the next scheduled judgment.
(Edited by Thapelo Lekabe)