Spare a thought for the decision-makers and ratings-committee members at Moody’s. Year in, year out, they put their reputations on the line to give SA a break. Everyone needs friends like those. They are not deterred by the overwhelming evidence for a credit downgrade.
The ratings agency has again deferred its credit-ratings decision on SA, possibly to see which way the May general elections will go. But the outcome is a foregone conclusion. The ANC will return to form the government, and the looting of public resources will continue.
Moody’s is the only one of the three major ratings firms to not dump SA’s sovereign credit rating into junk status. At times seemingly clutching at straws to give us a break, the agency has gone out of its way to keep SA at investment grade, thus staving off the inevitable.
Back in November 2017, after S&P Global Ratings and Fitch had downgraded the country to junk status, Moody’s held steady and chose to defer its ratings decision to wait and see how the ANC leadership contest would pan out the following month. It said it would wait and see what kind of leadership team would emerge from the Nasrec conference, where Cyril Ramaphosa eventually emerged victorious.
Ramaphosa, the reform candidate, promised a “new dawn”; Dlamini-Zuma had the backing of the Jacob Zuma faction, which represented, and still does, all that is wrong with the party and the state. But even though Ramaphosa won, and led the ousting of Zuma from the presidency, the promised “new dawn” was not as radical as the situation demanded.
Moody’s has urged SA to take steps to prosecute those guilty of corruption and state capture. Not in so many words, of course. Moody’s also called for moves to stabilise public finances and to fix state-owned companies. None came. In fact, things got worse, with Eskom reverting to introducing daily load-shedding in November. SAA went through yet another bailout quicker than a hot knife through butter.
When Tito Mboweni came in to present the medium-term budget framework last year, and followed up with the annual budget in February, Moody’s only lamented the budgets were “credit-negative”.
It would seem the credibility of Moody’s ratings decisions is not the top priority at the agency. For if it were, SA would have been junked soon after Zuma called finance minister Pravin Gordhan back from an investor roadshow to fire him in 2017.
While Moody’s acknowledged this week that public finances will deteriorate further, with public debt rising above 65% of GDP while the economy is crawling along, it is still giving SA the benefit of the doubt. Without saying so, it seems to be waiting for the election to deliver a win for Ramaphosa and support for reform.
While that is indeed a foregone conclusion, it is also a foregone conclusion that nothing will change in terms of governance. Ramaphosa’s hands will still be tied by an NEC that includes Gigaba and his fellow state-capturers.
Nomvula Mokonyane and Bathabile Dlamini will still be calling the shots in the cabinet and in parliament. Ace Magashule will still be holding the reins at Luthuli House. Aloota continua!..