Junk Status – What now?
The country has been downgraded to Junk Status but a debt management expert says it is not the end for South Africans.
Many saw it coming and some even tried to ignore it, but unfortunately South Africa’s biggest fear has come true – RSA’s sovereign credit rating has been downgraded to junk status.
Although this is devastating news for some and radical economic transformation is leaving uncertain and negative footprints for South Africans in the market as well as for foreign investors, it is not all doom and gloom, said Wikus Olivier, a debt management expert at DebtSafe.
“South Africans are tough and have shown that they are resilient in challenging times,” Wikus said.
What is junk status?
“Standard and Poor’s downgraded South Africa’s foreign currency rating to BB+ (sub-investment grade) while local currency debt has been downgraded to BBB– (a bit above junk), which still gives the country some hope,” explained Wikus.
He added, “A credit rating can be compared to an individual’s credit score. In the same way as your score influences your ability to obtain credit, so a country’s creditworthiness is affected. It also affects foreign investments by giving investors an indication of whether they will get their money’s worth or not, but it is still not as bad as it looks.”
• Interest rates may go up and have an impact on all consumers. But interest rates are still low compared to 2008.
• The Rand/ Dollar exchange has already dropped, but is now around R13,57 while back in March 2016 it was R16,03.
• Petrol prices will increase but compared to a few years back (2014), 93 octane unleaded petrol was R14,16 per litre while 95 octane unleaded petrol was R14,39. Today it is actually a rand cheaper per litre than back then.
• Imported goods will be getting a bit more expensive.
Although reality is hitting hard, Wikus encourages South Africans to keep their chins up and to put small, but effective measures in place by:
1. Financial planning – knowing where your spending leaks are by working with a proper budget.
2. Not distancing yourself from your finances – instead, be involved and ‘in touch’.
3. Staying away from further debt by using cash instead of a credit card.
4. Cultivating a simpler lifestyle (buying only what you need and cutting down on the dining out/ entertainment for example).
5. Creating room for movement in your finances – you are going to need it. Otherwise the changes in the economy will eventually catch up with you.
Be careful of the Prophets of Doom. It is not the end for South Africans.
Stay positive, get proactive, cut out expenses where you can and know that there will be better days ahead. If, however you are already finding yourself in financial despair and staring uncontrollable debt in the face, contact DebtSafe to guide and assist you with their effective debt management programme.
Do you perhaps have more information pertaining to this story? Email us at randfonteinherald@caxton.co.za (please remember to include your contact details in the email) or phone us on 011 693 3671.
For free daily local news on the West Rand, also visit our sister newspaper websites
Remember to visit our Facebook, Twitter and Instagram pages to let your voice be heard!
