ON THE MONEY
STUART THEOBALD: Bond downgrades will be another nail in coffin
Brace yourself. Both S&P Global Ratings and Moody’s, two of the biggest ratings agencies in the world, are due to pronounce themselves on the credit worthiness of SA’s bonds on Friday. Our dollar-denominated bonds are already junk, but rand-denominated ones have so far avoided the cliff edge. For the first time since the 1990s, we could find ourselves out of the club of creditworthy nations. Downgrades are almost inevitable after the mid-term budget showed that our debt levels as a percentage of GDP are higher than ever in post-apartheid SA. They will continue to rise until 2022. Our economic growth rates are pathetic, so government revenue is struggling. The institutional problems at the South African Revenue Service (SARS) add to the pain. The resignation of the head of the budget office of the Treasury, Michael Sachs, is a very bad signal for the government’s commitment to fiscal discipline. And Eskom’s disastrous financial position — with the utility on the verge of running out ...
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