Home / Business / SA Treasury DG downplays new rating agency

SA Treasury DG downplays new rating agency

National Treasury Director-General Lungisa Fuzile

National Treasury Director-General Lungisa Fuzile

Cape Town — Treasury director general Lungisa Fuzile believes a new rating agency that is pro-South Africa will have very limited benefits for the country.

His views follow Standard & Poor’s (S&P) decision this week to downgrade South Africa’s sovereign rating to BB+, which is non-investment grade or junk status, and Moody’s decision to place its Baa2 (two notches above junk) ratings of South Africa on downgrade review.

This follows the removal of ANC ministers Pravin Gordhan and Mcebisi Jonas from their roles as political heads of Treasury last week, stoking fears that South Africa will change its tight fiscal policy.

In an exclusive video interview with Fin24 at the Cape Town International Convention Centre yesterday, Fuzile — who revealed he resigned and will leave in mid-May — said South Africans “need to be a little more elegant in thinking” about the role of rating agencies.

There have been calls from some ANC politicians for the BRICS (Brazil, Russia, India, China and South Africa) nations to form their own rating agency, to combat the conservative stance of the current agencies.

South Africa’s sovereign bonds will only be officially rated as junk if Fitch or Moody’s downgrades the country to non-investment grade, a move that is likely to occur. South Africa would then join fellow BRICS countries Brazil and Russian, which are currently rated as junk by two or more rating agencies.

In his State of the Nation address in 2017, President Jacob Zuma said: “We welcome the Goa BRICS Heads of State and Government decision to establish the BRICS Rating Agency so that we can assist one another in assessing our economic paths.” — Sapa

Source :

chronicle

Check Also

Art revenue up 40pc

Enacy Mapakame Business Reporter Amalgamated Regional Trading (ART) revenue for the full-year to September 30, …

error: Content is protected !!