In a notice published in the night from Friday to Saturday, Moody’s has left unchanged its rating of Baa2 with a negative outlook assigned to the South Africa, but was in a hurry to quickly implement reforms to support growth.
The rating of Baa2 is two notches above the level of speculation.
The negative outlook “reflects the risks related to the implementation of structural reforms designed to restore confidence,” says Moody, who also laments the “political infighting that promote uncertainty and hinder reforms“.
The note of South Africa “would very likely be lowered in the absence of structural reforms“, insists the agency.
a Few hours before Moody’s, Fitch has also maintained its rating of BBB – to the South Africa, just one notch above speculative, but lowered its outlook to “stable” to “negative“.
Here, too, it is the unstable political climate across the country which has been pointed out.
“The political risks related to governance have increased and remain high (…) with negative consequences on macroeconomic outcomes,” said Fitch.
- Seizure –
For months, the shadow of a degradation-planar with emphasis on the most developed country of the continent.
Fitch expects a rise of 1.3% in 2017, and 2.1% in 2018.
For years, the economic engine of south africa at idle, a victim in particular of the fall in commodity prices. After +1.3% in 2015, the growth of its gross domestic product (GDP) should not exceed 0.5% this year.
Twenty-two years after the official end of apartheid, the country is still crippled by inequality, with an unemployment rate at its highest level in thirteen years that hits 27.1% of its active population.
foreign investors are increasingly doubtful about the ability of president Zuma to restart its economy.
Weakened by a series of corruption scandals, the head of State, whose second and final term must be completed in 2019, is increasingly criticized, even within his party, the african national Congress (ANC).
In his own government, Mr. Zuma and his entourage are opposed to the minister of Finance Pravin Gordhan, who has the confidence of the markets and good management of public enterprises one of its priorities.
“The internal struggle within the ANC and the government will probably continue next year,” noted Fitch. “It will distract policy makers and produce signals that will continue to undermine the investment climate“, adds the agency.
- Resilience –
“The south african economy has demonstrated its resilience despite the challenges“, he stressed in a press release, “the decisions of the rating agencies recognize the commitment (of the country) to maintain economic policies and sound institutions“.
To avoid a penalty of agencies, the government has multiplied in recent weeks the signs of good will to the place of investors.
To appease the social climate, it has unveiled a draft of the minimum monthly wage. He also announced a spreading of its future civilian nuclear program, including the estimated cost of 1,000 billion rand (65 bn euros) concerned the analysts.
he welcomed the absence of degradation, the main opposition party, the democratic Alliance (DA), has emphasized that warnings sent to the power.
The note of Fitch is “a cause characterized” of Mr Zuma, has estimated Friday, one of its leaders, David Maynier, “a glaring proof that the policy is killing the economy in South Africa“.
Even if Fitch and Moody’s have for the time spared South Africa, a number of analysts remain convinced that it will not be able to avoid a penalty.
The agency Standard and Poor’s must make to turn its verdict next Friday.
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