Friday, 06 May 2016 13:16

Capital outflows likely if SA downgraded

Written by
Rate this item
(0 votes)

The Reserve Bank says a further rating downgrade of South Africa could lead to capital outflows.


Releasing the Financial Stability Review on Tuesday, the central bank said for more than a year credit rating agencies have been concerned about South Africa’s rating.

In March, Moody’s Investors Service visited South Africa for its annual review. Earlier in that month, the ratings agency had placed South Africa’s long and short term ratings of “Baa2” and “P-2”, respectively, on review for a possible downgrade.

“The impact of a further ratings downgrade on the South African economy and financial system could manifest in the form of capital outflows and potential spill overs to rand-denominated South African government debt,” said the Reserve Bank.

The review - which aims to identify and analyse potential risks to financial system stability - said the persistent weak economic fundamentals, the current account deficit, budget deficit and other structural constraints led to a downgrade in the economic outlook for the country to negative.

The publication said although the 2016 Budget Speech ensured the continuation of fiscal discipline, rating agencies are still concerned about the implementation of the measures outlined in the speech.

“Rating agencies will closely monitor other factors, including economic growth,” said the bank. 

Last modified on Friday, 06 May 2016 13:25

Most Popular

Getting into the buy-to-rent market without risking everything

May 03, 2017
Garry Palmer
A low growth economy and a rising cost of living has given property investors pause for…

Attacq appoints Jackie van Niekerk as Chief Operating Officer

May 05, 2017
Jackie van Niekerk md
Attacq announces the appointment of Jackie van Niekerk as the JSE listed capital growth…

Fourleaf Estate in PE is Africa's first residential development to receive full EDGE certification

May 05, 2017
Fourleaf Estate pic
The Green Building Council South Africa (GBCSA) has announced that the Fourleaf Estate…

Eris Property Group announces R1, 5 Billion new development in Umgeni, Durban

May 17, 2017
Umgeni Deco and Lifestyle Park Durban
Umgeni Deco & Lifestyle Park, Durban’s prime destination centered for success. 

Midrand residential property market continues to boil - Gauteng¹s fastest growing centre continues to attract investment

May 11, 2017
Waterfall Country Estate R9 95million
While house price growth in Gauteng has shown tentative signs of recovery in the last 12…