President Jacob Zuma on Tuesday said that the South African government respected credit rating agencies, but that their opinions did not have an impact on agreements and commissions entered into with other countries.
“We take the agencies and their work very seriously because it is also another mechanism through which governments take stock of the work they do and ensure continuous improvements in governance,” Zuma said.
“While rating agencies are an important feature on the world economy, they do not necessarily impact on agreements between countries.”
Zuma was giving oral replies to questions in the National Council of Provinces in Parliament.
Representatives of credit rating agencies are expected to visit the country next month for an assessment, before issuing their findings in December.
They are expected to be closely monitoring politics and the developments around fraud charges laid against Finance Minister, Pravin Gordhan.
Gordhan will deliver the medium-term budget policy statement in Parliament on Wednesday and is expected to remain focused on fiscal strengthening.
Zuma said South African government approached economic and fiscal policy prudently, always seeking to ensure that there was macroeconomic stability and that public finances were sustainable.
“There is no doubt that adhering to this approach has helped preserve South African credit rating,” Zuma said.
He said credit rating agencies assessed the ability of debtors to pay back the money they owed. And depending on their assessments, they then issued credit ratings for sovereign borrowers, such as our government.
“Since most counties depend on international investors and access to international capital markets, good credit ratings are very important,” Zuma said.
South Africa has agreed to the establishment of a new rating agency as part of the BRICS bloc (Brazil, Russia, India, China, and South Africa).
Zuma said BRICS countries had decided to create their own ratings agency and felt necessary to do so partly because of the manner in which rating agencies were handling the ratings of BRICS members.
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