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Moody’s downgrade will hurt SA’s post Covid recovery, says Durban Chamber of Commerce

Nigel Ward, president of the Durban Chamber of Commerce and Industry, comments on Moody's downgrade.

THE downgrading of South Africa’s rating to junk status by Moody’s Investors Service could not have come at a sorse time, says Durban Chamber of Commerce and Industry president, Nigel Ward,

Ward said South Africa was experiencing the negative economic and health effects of the novel coronavirus disease (COVID-19) pandemic, and the downgrade to junk status would put additional pressure on the economy and financial markets and extend the road to economic recovery.

“The Durban Chamber believes that the downgrade will threaten investor confidence with numerous investors withdrawing funding in the coming months. Additionally, the downgrade will result in South Africa’s borrowing costs increasing, resulting in the government reprioritising its financial resources. This could result in South Africa forgoing social and economic initiatives to service debt,” said Ward.

ALSO READ: Durban Chamber of Commerce notes economic affects of Covid-19 crisis

He said South Africa’s excessive debt level posed a considerable threat to its fiscus, and the country needed to limit its borrowing and reduce current debt levels, given the low levels of economic growth.

Furthermore, the Durban Chamber urgently called on the government to modify its approach towards state-owned enterprises (SOEs).

“Even though the Durban Chamber strongly believes that our critical SOEs are too important to fail, the continuous cycle of expanding debt and bailouts cannot continue indefinitely and without repercussions. The Durban Chamber believes that all social partners need to pull together to promote South Africa as a preferred investment and tourist destination to local and international investors in order to restore business confidence,” he said.

Ward said the Durban Chamber would continue with robust engagement with government to ensure that implemented policies are indeed the best possible options in the interest of the private sector and conducive for inclusive and sustainable economic growth.

 

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