Moody's affirms South Africa's Baa1 ratings, maintains negative outlook

By bne IntelliNews July 22, 2013

Moody's Investors Service has affirmed South Africa’s Baa1 sovereign rating, citing stricter public spending discipline and the government’s initiatives aimed to achieve financial and labour market stability.

The global ratings agency, which lowered in September 2012 South Africa's rating to Baa1 from A3 due to concerns about the government's institutional strength and the country’s investment climate and political stability, maintained its negative outlook on the rating, citing continued social and political pressures on the macroeconomic policy framework ahead of next year's general election, sluggish economic growth, and the weakened outlook for the mining sector, which is the country's largest employer and main source of foreign-exchange earnings.

South Africa’s mining sector has been negatively affected by the recent collapse of both gold and platinum prices and also by the dwindling feasibility of many of the country's gold mines given the cost of production in ever-deeper mine shafts, coupled with high wage demands and frequent strikes.

Moody’s noted as positive the government's adoption and initial implementation of the National Development Plan (NDP), which aims to reduce poverty and inequality over the coming decades, after the governing ANC party rejected the idea of nationalizing the mining and other sectors in December 2012.

Moody's said that it could upgrade South Africa's rating outlook to stable if the government maintains its commitment to its spending ceilings, reducing its debt ratios over the medium term, and if a new labour-relations framework in the mining industry is successfully implemented and leads to stronger growth.

On the other hand, South Africa’s ratings may be lowered in the event of a negative trend in the government's fiscal and debt trajectory, and/or heightened socio-political unrest that could slow further economic growth and deteriorate financial stability.

Related Articles

Almaty cost of living lowest among major cities

Kazakhstan’s largest city and business centre Almaty has dropped to last place on the Economist Intelligence Unit’s bi-annual ranking of the ... more

AB InBev sells 54.5% stake in African Coke bottling business for $3.15bn

Anheuser-Busch InBev will sell a 54.5% stake in Africa's largest Coke bottler to Coca-Cola Company for $3.15bn, the two companies said in a joint statement on December 21. The deal is expected to ... more

IMF slashes South Africa’s 2016 growth outlook to 0.7%

The International Monetary Fund (IMF) has lowered sharply its 2016 GDP growth forecast for South Africa to just 0.7% from 1.3% anticipated in October, its World Economic Outlook (WEO) update released ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss