Treasury positive about next Moody’s credit rating

The Treasury is hopeful that Moody’s Investors Service will not downgrade SA’s sovereign credit rating to junk status when it announces its decision at the end of the month.

A Moody’s downgrade would also weigh on growth, with the Treasury factoring in a contraction of 1.2% for 2019, as opposed to a growth forecast of 1.5%, should a downgrade take place, said Duncan Pieterse, acting director-general of economic policy. A further contraction of 0.2% in 2020 is expected in such a scenario, he said. Prolonged and constant load-shedding by Eskom would result in a forecast growth rate of 0.2% in 2019.

“We have been in discussion with the ratings agencies. Of course there has been slippage on the headline fiscal numbers, which has been noted and which is credit-negative,” Stuart said in a briefing to parliament’s finance committees. He and other Treasury officials were responding to comments on the budget made during public hearings earlier in the week.

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