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SA’s weak growth could fuel socioeconomic tensions – Moody’s

And impede policy reforms.
Image: Ramin Talaie/Bloomberg

South Africa’s low economic growth and rising debt burden could see socioeconomic tension intensify and impede policy reforms, ratings firm Moody’s said in a research note on Tuesday.

The note, an extract from the credit firm’s annual report published on Monday, said South Africa’s credit profile was balanced, with its low level of foreign currency debt and strong core of institutions counting in its favour.

Moody’s decided this month against making any decisions on the country’s credit ratings, currently two levels deep into subinvestment, at Ba2 with a negative outlook.

The two other major ratings firms, Fitch and S&P, also rate the country deep into junk.

“Credit challenges include structurally very weak growth and a high government debt burden that will continue to rise without comprehensive economic and fiscal reforms,” Moody’s said.

“Socioeconomic inequalities also intensify tensions that drive political risk and complicate policy efforts.”

South Africa has one of the world’s highest levels of income inequality, especially between Blacks and Whites. This is partly because of decades of apartheid rule, which ended in 1994, and more recently an effect of government corruption and slow policy reforms.

The economy, already in recession before the coronavirus pandemic struck in March 2020, shrank by a record 7% last year. State debt is nearing 90% of gross domestic product (GDP).

“The coronavirus pandemic’s fallout will continue to weigh on South Africa’s economic growth and fiscal balance in 2021,” said Lucie Villa, a senior analyst at Moody’s.

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Lucie is fast asleep as is usual with Moody’s.

Mentions “apartheid” but no mention of a corrupt thieving anc government.

If you want to see inequality Lucie my dear compare the political elite with the voters that vote for them.

That’s the real world. Not the nonsense you dream off.

TSK!!!!

Were these guys and Fitch not the same boys that rated the
failing US banks AA+ in 2008?

Why does the world allow three US based ratings agencies to rate the world?

These guys do not rate their side lower ever.

It is almost as if they have prejudices of their own. Are they using the media or Stats SA for their ratings? If so, good luck.

The average voter is unable to comprehend that his mindset, as reflected in his political choices, impedes economic growth. He does not have the cognitive ability to realize that he is responsible for the Debt/GDP ratio and that he creates his own unemployment problem.

Since we cannot expect a political solution, we are left with only two alternatives.
1. The next commodity supercycle can support economic growth and support the Treasury to fund social grants and service government debt. The commodity supercycle will be the result of currency devaluation in the USA.
2. The Debt/GDP ratio can be massaged or manipulated by the SARB to inflate the GDP relative to the Debt through currency devaluation.

This implies that if the Federal Reserve does not print the money to bail us out, the SARB will have to print the money to do so. The implication is the same. Every citizen will pay down the debt through the loss of purchasing power, generally called inflation. The ignorant voter will foot the bill and pay for his mistakes. Socialist ANC policies merely borrow from the future spending power of their own supporters. This is how ANC supporters plunder their own future.

Strange. Where I work al the people on the same level earn the same, regardless of colour. Black and White earn the same. All have the same or similar qualifications and are on the same pay scale.

Just ignore Moody’s, it is very scary how the world allows these people to influence the world economics with their very biased and incorrect observations.

Congratulations mate I wish it could be like this all over than we’d have a flourishing society with loads of enthusiasm and prominence. Respect to your employer for scaling in that. That is built on the ethos of that company or entity you work for. Many companies have these wonderful slogans and visions but actually rarely live out what’s written on it. When a comment like yours comes by it’s valued indeed. Thanks for being honest.

Would you like to help, Moody’s?

End of comments.

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