9 May 2016
The Banking Association South Africa (BASA) commends the collective efforts by Government, business and labour, which have contributed to the recent decision by ratings agency Moody’s to maintain our country’s sovereign rating two notches above sub-investment grade.
“Whilst, at this stage, we have done enough to avoid a downgrade by Moody’s, we cannot afford to be complacent. Moody’s has cited that the country is approaching a turning point after years of falling growth, but it has also placed South Africa on a negative outlook. This requires Government, business and labour to continue to work together with even greater determination to ensure the implementation of plans, to place the economy on a stronger trajectory in the near term” says Cas Coovadia, Managing Director of The Banking Association South Africa.
The investment grade credit rating affirmation also demonstrates the resilience of our country and the determination of key role players to steer our economy in a positive direction to achieve outcomes in the interests of boosting growth and regaining investor confidence.
With ratings agencies Fitch and Standard & Poor’s due to visit South Africa in a fortnight, we must sustain the momentum and continue to build on the confidence demonstrated by Moody’s and to resolutely address the implementation risks highlighted by Moody’s as the basis of their negative outlook
This requires a sustained united effort to bolster South Africa’s international credibility and convert our discussions and plans into concrete, measurable and implementable actions that have a direct impact on:
• Building investor confidence
• Tightening fiscal consolidation
• Controlling debt and therefore expenditure
• Reducing the budget deficit as a percentage of GDP
• The resilience of South Africa’s public finances
• Promised structural and legislative reforms
• Stronger, faster and more inclusive economic growth as our most pressing challenge
• The viability and impact of key state owned enterprises in the economy
According to Coovadia, “The Moody’s decision confirms that macroeconomic coordination and public financial management – which are central to implementing our development plans, remains under the excellent and unyielding stewardship and guidance of National Treasury led by Minister Pravin Gordhan. It is therefore a national asset, which we must all continue to protect and be proud of.”
We must now focus on the execution of our commitments, in order to address those factors which Moody’s have cited as the basis for their negative outlook and to avoid the possibility of a split-rating spanning investment and sub-investment grade.
Coovadia indicated it is critical for Government, business and labour to speak from one page and emphasise the centrality of putting SA on a sustainable and inclusive growth path. He said: all critical actions by these three central stakeholders must be measured against the inclusive growth priority, and anything mitigating against promotion of inclusive growth must be discarded or revisited.”
The Banking Association South African remains resolute and recommitted to working in partnership and collaboration with Government, labour and the private sector to build on the confidence demonstrated by Moody’s, by convincing Fitch and Standard & Poor’s that South Africa is on the right track to lay the basis for improved growth in the medium term and our institutional strength outweighs political developments.
For media enquiries or an interview with the MD please contact
Media & Communications Officer
Managing Director’s Office
The Banking Association South Africa
Tel: +27 11 645 6729
Cell: +27 76 791 6918