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MOODY'S DOWNGRADE WILL HURT SA'S POST COVID RECOVERY - Nigel Ward
MOODY'S DOWNGRADE WILL HURT SA'S POST COVID RECOVERY Nigel Ward, President, Durban Chamber of Commerce and Industry NPC The Durban Chamber of Commerce and Industry has noted Moody's Investors Service decision to downgrade South Africa's sovereign rating to junk status.
The Durban Chamber believes that the timing of this downgrade could not have come at a worse time as South Africa is experiencing the negative economic and health effects of novel coronavirus disease (COVID-19) pandemic.
This downgrade to junk status will put additional pressure on our economy and financial markets and extend our 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. South Africa's excessive debt level is a considerable threat to our fiscus, and we need to limit our borrowing and reduce current debt levels, given the low levels of economic growth. Furthermore, the Durban Chamber urgently calls 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. The Durban Chamber will 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. < For more information, visit www.durbanchamber.co.za
MOODYS DOWNGRADE WILL HURT SAS POST COVID RECOVERY - Nigel Ward.pdf
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