Moody’s cautious on Ramaphosa win

While a Cyril Ramaphosa win could mean a positive shift for policy and the country’s ratings outlook, his narrow victory and opposition within the ANC top six means “substantial political obstacles” to reform remain.

This is according to credit ratings agency Moody’s, which released a statement in the wake of the results of the ANC’s elective conference on Tuesday.

Moody’s is the last ratings agency that holds South Africa’s local currency debt at investment grade, which allows South Africa to remain in key global bond indices such as the Citigroup World Government Bond Index (WGBI).

After a series of recent downgrades by Fitch and S&P Global, Moody’s placed South Africa on negative ratings watch but stopped short of downgrading South Africa outright.

Instead it opted to wait until the 2018 February budget, and after the elective conference to make the decision.

Should South Africa finally get downgraded by Moody’s and exit the likes of the WGBI, it is estimated by some analysts that as much $14-billion in capital flows, will leave the country.

Zuzana Brixiova, a senior analyst at Moody’s said that Ramaphosa’s victory meant there could be a “tentative prospect of a shift in policy and a rise in business confidence that could reverse the gradual deterioration in South Africa’s credit fundamentals.”

The “market-oriented” reforms that Ramaphosa had outlined on his campaign were evidence of this, she said, including a balanced macro-economic policy that maintained fiscal discipline; governance reforms at state-owned enterprises and strengthening key state institutions to combat corruption and state capture.

But the relatively strong representation of the opposing faction in the ANC leadership “will likely complicate policy negotiations and could delay agreement on key reforms,” Brixiova said.

Alongside Ramaphosa, the top six is split evenly between those from the Nkosazana-Dlamini Zuma camp, namely Ace Magashule as Secretary General, Jessie Duarte as his deputy and David Mabuza as deputy president.

“In principle, the ANC President is mandated to implement the policies concluded during the ANC policy conference in July 2017. In practice, Mr. Ramaphosa’s narrow victory complicates reaching consensus and leaves room for delays,” she said.

Nevertheless the speedy implementation of even a “subset” of reforms, such those on fiscal stability and SOE governance was likely to boost confidence and growth she said.

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

Where is the deputy president?

David Mabuza is hard at work — it’s just not taking place in the public eye. The rumblings and discussion in the ANC are about factions in the ruling party, succession and ousting him

Zuma turns on judiciary as trial nears

Former president says pre-trial correspondence is part of another plot

SANDF inquiry clears soldiers of the death of Collins Khosa

The board of inquiry also found that it was Khosa and his brother-in-law Thabiso Muvhango who caused the altercation with the defence force members

Lockdown relief scheme payouts to employees tops R14-billion

Now employers and employees can apply to the Unemployment Insurance Fund for relief scheme payments

Press Releases

Covid-19 and Back to School Webinar

If our educators can take care of themselves, they can take care of the children they teach

5G technology is the future

Besides a healthcare problem Covid-19 is also a data issue and 5G technology, with its lightning speed, can help to curb its spread

JTI off to court for tobacco ban: Government not listening to industry or consumers

The tobacco ban places 109 000 jobs and 179 000 wholesalers and retailers at risk — including the livelihood of emerging farmers

Holistic Financial Planning for Professionals Webinar

Our lives are constantly in flux, so it makes sense that your financial planning must be reviewed frequently — preferably on an annual basis

Undeterred by Covid-19 pandemic, China and Africa hold hands, building a community of a shared future for mankind

It is clear that building a community with a shared future for all mankind has become a more pressing task than ever before

Wills, Estate Administration and Succession Planning Webinar

Capital Legacy has had no slowdown in lockdown regarding turnaround with clients, in storing or retrieving wills and in answering their questions

Call for Expression of Interest: Training supply and needs assessment to support the energy transition in South Africa

GIZ invites eligible and professional companies with local presence in South Africa to participate in this tender to support the energy transition

Obituary: Mohammed Tikly

His legacy will live on in the vision he shared for a brighter more socially just future, in which racism and discrimination are things of the past

The best local and international journalism

handpicked and in your inbox every weekday