Moody's: Unemployment a threat to SA's ratings

Unemployment, deep social challenges and capacity shortfalls could negatively affect the South African government’s AAA rating, ratings agency Moody’s warned during its sub-Saharan Africa credit risk conference on Thursday.

It highlighted unemployment, especially that of the youth, and the related social ills of poverty and crime, as challenges for the South African government that could lead to the “temptation of socially and fiscally unaffordable shortcuts”.

The country’s low external exposure to credit and debt risks was identified as positives for the government’s rating.

Other factors positively affecting ratings included government’s careful budget planning and implementation, improved control over inflationary expectations via inflation targeting, banking oversight and regulation, and deep domestic financial markets.—I-Net Bridge

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