Johannesburg - Government says Moody’s decision to keep South Africa’s credit rating at two notches above sub-investment grade shows the country is on the right track and that the turning point for the economy is near.
“Moody's decision represents victory for us as government as we continue to put in work to fix our economy, which has drastically slowed down,” said Minister in the Presidency for Planning, Monitoring and Evaluation Jeff Radebe on Monday.
Minister Radebe was briefing the Foreign Correspondents’ Association on government’s interventions to grow the economy for the benefit of ordinary South Africans.
Moody’s this weekend affirmed South Africa’s government bond long and short term ratings of Baa2 and P-2 respectively, and assigned a negative outlook. Moody’s is the only solicited rating agency that assigns the same rating for both the domestic and foreign currency denominated debt, Baa2 – a rating that is two notches above sub-investment grade.
The World Bank has projected SA’s growth for the next three years at between 1.4% and 1.6%. Minister Radebe said the slow growth can and will be fixed. However for this to happen, government, labour and business need to continue pulling in the same direction to weather the storm.
“We will get to that turning point and show the world that South Africans are resilient. We've done it in the past and we are still capable of bouncing back stronger,” said Minister Radebe.
Fitch Ratings and S&P Global Ratings, formerly Standard & Poor’s Ratings Services, are expected to review South Africa next month. Both rate the country BBB-, a notch lower than Moody’s and the lowest investment grade.
Minister Radebe said with the upcoming visit by the two agencies in a fortnight, the country must sustain the momentum and continue to build on the confidence.
He said government remains positive that Standard & Poor’s and Fitch Global Ratings will also not lower the nation’s rating to a non-investment grade.
“The S&P and Fitch global ratings is another important bridge that we will have to cross as a country. Will we once again safely cross to the other side. I believe we will,” he said.
Minister Radebe said government, together with labour and business, has shown that the country can get out of this challenging situation.
“If we continue to work together as it's been the case in recent times, we will avert any looming credit downgrade and bring our economy back on its two feet,” he said, adding that working with the private sector, government is providing leadership and rallying everyone, mainly ordinary citizens, to join in and pull in one direction.
Stimulating growth
Minister Radebe also used his briefing to outline steps taken by government working together with business to reignite growth.
These steps include the implementation of the National Development Plan, which sets out proposals aimed at assisting the country navigate the economic difficulties by undertaking a number of reforms.
Other measures are the adoption of the Medium Term Strategic Framework for the period 2014 – 2019; the Nine-Point Plan -- which has introduced initiatives to support greater industrialisation, as well as Operation Phakisa and the National Infrastructure Plan.
Detailing some of the success in these interventions, Minister Radebe said in Operation Phakisa alone, investments amounting to about R17 billion in the Oceans Economy have been unlocked.
Over 4 500 jobs have been created in the various projects of the Oceans Economy, while over R7 billion has been allocated by Transnet National Ports Authority to improve the country’s ports.
Between 2009 and 2014, spending on the National Infrastructure Plan exceeded R1 trillion. This focused on energy, transport and water infrastructure.
As a result of government’s effort to create a favourable investment climate, the economy has experienced significant new investments. These include locomotive production by General Electric, with 70% or R35 billion of the contract value for the 1 064 locomotives allocated to local manufacturing by Original Equipment Manufacturers (OEM).
The Automotive Production and Development Programme (APDP) has led to new investments by Goodyear with R670 million, Volkswagen R4.5 billion, BMW R6 billion, and Beijing Auto Works R12 billion.
The Renewables Programme has unlocked private sector investment in electricity generation, from a zero base to R192 billion in four years.
Government has also gone further to introduce additional measures to curb spending, which was announced earlier this year.
Government is currently identifying underperforming programmes that should be discontinued in order to release resources for implementation of key NDP priorities. A report on this, Minister Radebe, said will come before Cabinet in July. - SAnews.gov.za
