President Jacob Zuma says that South Africans highly politicise the rating agencies, making them out to be a bigger issue than other countries.
Zuma was responding to questions from MPs in Parliament on last Wednesday.
Moody’s and Standard & Poor’s (S&P) will release their credit ratings reviews on 25 November and 2 December respectively, while Fitch is expected to follow suite in the near future, although no calendar dates have been provided yet.
President Zuma said that the government has worked very hard to grow the economy under very difficult conditions of ‘global meltdown’.
He said that the government has worked with the agencies who grade the country.
“What is funny here, is that South Africans highly politicise the rating agencies”. He suggested that when other countries are downgraded it is hardly ever spoken about.
He cited countries including France, Russia, Turkey, the UK, Brazil, China and the US as countries who have been downgraded over the past five years.
“You have never heard, but in South Africa, even if they have not arrived, its a big issue. We are politicising downgrading – that is our problem,” Zuma said.
He said that agencies have been to South Africa and they will take their decision, as they have been taking their decisions to all other countries.
“The point I am making,” Zuma said, “is that we here tend to politicise things and therefore create a very big hype when this is not an issue to other people.”
He said to the house that many would probably be hearing for the first time that other countries are in junk status. “It was not a big issue,” he said.
“Reviews by rating agencies are important for the country, they form part of many monitoring mechanisms that encourage us to improve governance in both the public and private sector,” Zuma said earlier in the session.
Asked by the DA’s David Maynier, what his views are that a credit rating agency be set up which would be more sympathetic to the needs of Brics nations, Zuma said “there’s nothing wrong with that”.
“There are views and there are views on the economy,” Zuma said. “There’s not one view. Western countries or whatever part of the world – they all have assumptions. [The] Brics (countries) look at the world in a particular way and do their own approach to ratings.”
Moody’s investment grade of South Africa is at Baa2 for local and foreign currencies with a negative outlook. The rating is two notches above sub-investment (also referred to as junk) grade.
S&P has South Africa’s credit rating assigned as BBB+ (local currency) and BBB- (foreign currency) – one level above junk status with a negative outlook.
Fitch rates South Africa at BBB (local currency) and BBB- (foreign currency) – also one notch above sub-investment grade, but with a stable outlook.