South Africa’s finance minister to meet with Moody’s to stave off third downgrade

CAPE TOWN - Reuters

South Africa’s new Finance Minister Malusi Gigaba said on April 13 he would meet with ratings firm Moody’s to convince them the country would stay on the path of fiscal discipline, in order to avoid a third credit downgrade.

Gigaba, who replaced the respected Pravin Gordhan in a cabinet reshuffle that triggered credit downgrades to sub-investment by S&P Global Ratings and Fitch, told local investors he would clarify Treasury’s policy positions to Moody’s on an upcoming roadshow overseas.

“There is no silver bullet in this regard. Nothing is taken for granted and nothing is taken as a guarantee,” Gigaba told the media after briefing investors at parliament.

“We will do all we can to avoid another downgrade and one of the ways to do that is to engage with Moody’s directly, to demonstrate our willingness to stay the course in terms of fiscal discipline and fiscal consolidation,” Gigaba said.

The cabinet reshuffle by President Jacob Zuma, who is mid-way through his second five-year term ending in 2019, has roiled domestic financial markets and battered the rand. The opposition has called on Zuma to resign and held protests to force him out of office.

Investors have also sought answers over Zuma’s policy of “radical economic transformation,” which has been echoed by Gigaba. Zuma has also recently talked of plans to redistribute land without compensation.