Get more Mail & Guardian
Subscribe or Login

Moody’s is wrong, says Motlanthe

Rating agency Moody’s downgrading of South Africa’s credit rating outlook was wrong, Deputy President Kgalema Motlanthe said on Friday.

“We respectfully disagree with Moody’s statement and the interpretation drawn from the dynamic nature of our political environment,” he said at a presentation at the Gordon Institute of Business Science in Johannesburg.

“[Moody’s downgrade] demonstrates the superficial way in which world rating agencies tend to conduct their assessments.”

Last week, Moody’s changed its credit rating outlook for South Africa’s economy from stable to negative.

Motlanthe said this was done even though South African banks had avoided the crisis thanks to measures including the introduction of the National Credit Act.

He said Moody’s revealed a lack of understanding of the approach taken by government to deal with the financial crisis.

This included working with business and organised labour to try to avoid retrenchments and placing jobs at the centre of economic recovery.

Moody’s said last week it was concerned South African politicians would not be able to stick to strict fiscal policies as this could be undermined by pressure from the ANC and labour.

Sticking to commitments
The agency said the ANC’s “unwillingness to definitively reject demands from certain segments of the political spectrum for more activist policy interventions was harmful to South Africa’s economic prospects”.

Motlanthe said Moody’s decision was unexpected as it came shortly after Finance Minister Pravin Gordhan delivered his medium term budget policy statement in which government reaffirmed its commitment to sound macroeconomic policies.

It also committed to sticking to a sustainable fiscal path by keeping increases in government spending to around 2.3% and undertaking to cut spending on non-core items.

Motlanthe said the ANC supported government policy and the medium-term budget policy statement.

“While there may be debate in the ANC there is a high level of discipline in government and we have proven over time that we stick to our commitments.”

Motlanthe took a stab at rating agencies in general.

“Ironically, the rating mechanism failed to forewarn the world about the potential of an ensuing eurozone debt crisis, including the crisis in Greece, which has prompted the European Commission to call for the regulation of rating agencies themselves,” he said. — Sapa

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Gillian Jones
Guest Author

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

DA’s egregious sexual harassment case finally begins

The party is accused of protecting a councillor, who’s also implicated in R1.2m graft

The ANC, DA and EFF ‘oblivious’ to climate crisis —...

The Climate Justice Charter Movement has critiqued the manifestos of the main parties contesting the local government elections and found them ‘shallow’

More top stories

It’s safe to open the beaches, says UPL after chemical...

Agrochemical producer UPL said it has paid R250-million in chemical spill clean-up

Former spy boss Fraser objects to Zondo’s nomination as chief...

The former director general of intelligence’s character assassination of the deputy chief justice is straight out of the Zuma playbook

Special Investigating Unit to oppose efforts to reject Mkhize report

Former health minister Zweli Mkhize seeks relief to declare the SIU’s conduct against him ‘unlawful and unconstitutional

Bird flu outbreak on Dyer Island causing mass deaths

The island hosts the vulnerable African penguins, endangered bank cormorant and roseate tern
Advertising

press releases

Loading latest Press Releases…
×