South Africa: Stop Dancing to Moody's Tune

South African currency
analysis

Moody's would have known that downgrading SA at this moment would place our government in even greater difficulty in confronting Covid-19 and hobble it in the reconstruction that must follow its aftermath. But they went ahead anyway.

In a recent article in The Guardian economist Adam Tooze wrote:

"In making the difficult choices that lie ahead we have at least gained one degree of freedom. The big idea of the 1990s that "the economy" will serve as a regulating superego of our politics is a busted flush. Given the experience of the past dozen years we should now never tire of asking: which economic constraints are real and which imagined?"

We should keep these wise words in mind as we process the decision of ratings agency Moody's to downgrade South Africa to junk status, on the first day of a national lockdown to mitigate what President Cyril Ramaphosa described as "a medical emergency far graver than what we have experienced in over a century."

The cost (see here and here) of Moody's downgrade, announced on 27 March, is like kicking somebody when they are down. In a few weeks that has seen the public interest and recognition of the need...

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