Moody’s awards Baa2 credit rating to South Africa

Globally respected rating agency, Moody's Investor Service has said in a new report that it has awarded a sovereign credit rating of Baa2 to South Africa.

South African Finance Minister Pravin Gordhan has welcomed the rating indicating that the government will continue to work to revive the country's economy. The minister said that the rating defied predictions of a downgrade by the rating agencies. He added that the government will work to implement plans that are being discussed with business and labour in order to enable faster economic growth.

Moody's affirmed the country's sovereign credit rating at Baa2, which istwo notches into investment grade. The agency said that recent developments on the political front includingConstitutional Court judgment on Nkandla and High Court ruling on corruption charges against President Jacob Zuma, has shown that the country has strong fundamental institutions. The agency expects the country to approach a turning point after years of falling growth.

Moody's said that the various supply-side shocks, which have affected economic growth, are expected to reduce. "Specifically, the electricity supply is now more reliable, the drought is ending and the number of work days lost to strikes has shrunk."In addition, the inflation outlook is more subdued, which would suggest fewer interest rate rises ahead than we expected when the SA Reserve Bank saw inflation heading towards 8 percent by year end," Moody's said.