14 March 2016

South Africa: Gordhan - World's Investors Are Watching SA Closely

Global investors are keeping an eye on South Africa as it teeters on the brink of possible downgrades from credit rating agencies, Finance Minister Pravin Gordhan said on Monday afternoon.

He was addressing a media briefing at the JSE to report back on the roadshow government, business and labour representatives held in London, Boston and New York last week.

He said the delegation met with 250 investors to discuss the economic situation of the country, which the International Monetary Fund forecasts will experience gross domestic product growth of just 0.7% this year.

"The key message is that the world is watching South Africa very carefully," said Gordhan.

South Africans must be aware that "we need to provide very concrete evidence over the next few months that we're not just talking", he said.

Amid slower growth and rising inflation in the country, rating agency Moody's said last week that it will visit South Africa from March 16 to 18 before making a decision on its investment status.

This comes after Moody's put South Africa on an intense watch for a possible downgrade to one notch above junk status.

"On the downgrade, one thing we must clarify is that Moody's has us two notches above sub-investment grade," said Gordhan, referring to South Africa's proximity to junk status.

Meanwhile, rating agencies Standard & Poor's and Fitch have South Africa on one notch above junk status on their scales.

Despite looming downgrades, Gordhan said the international investment community still has "confidence that as a leadership team we have the ability and resources to put our economy on a higher road to growth".

"We are not the worst off in the world... there are many countries that are in a worse position than ourselves," said Gordhan.

"What's our plan if we get downgraded? Get upgraded. But we don't want to end up there as a country," he said.

Source: Fin24

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