SA’s rating would be downgraded if “the strength and independence of institutions notably diminish.” This is according to Zuzana Brixiova – Vice President – Senior Analyst, Sovereign Risk Group, at Moody’s.
She was addressing the Moody’s Investors Service 12th annual sub-Saharan Africa summit in Johannesburg today.
Other reasons for a rating downgrade would be if SA’s emerging policy framework becomes even less predictable or undermined economic or fiscal strength – and if liquidity pressures begin to re-emerge at State Owned Enterprises that would elicit pronounced government intervention.
However, Brixiova said Moody’s could stabilize the outlook if the SA government were to implement policies and reforms that:
- indicated the continued independence and strength of policy institutions, and
- enhanced medium-term growth and stabilized the government’s debt burden.