In a credit opinion released on Wednesday‚ Moody’s said: “Indications that the strength and independence of the country’s institutions have diminished to a greater extent than in Moody’s baseline scenario‚ or that the emerging policy framework has become even less predictable or has shifted in a way likely to undermine economic or fiscal strength‚ could lead to a further downgrade.”
It added that delays in reforms to stimulate growth would signify this shift and warned that guarantees to state-owned enterprises (SOEs) remained a concern.
Moody’s added‚ however‚ that it could change the rating outlook to stable if the government were to implement policies that “indicated the continued independence and strength of South Africa’s policy institutions‚ and which enhanced medium-term growth and achieved the planned stabilization in the government’s debt burden”.
It added that a decline in guarantees to SOEs would be “credit positive”.
- TimesLIVE/BusinessLIVE