Rating agency Moody’s seem to be willing to cut South Africa some slack as they once again review the country’s investment grade status over the next few months.Clearly, the very serious way in which Pravin Gordhan – and others in Cabinet – has grasped the severity of a potential downgrade has assisted Moody’s in realistically assessing prospects for recovery.Rating agencies now have huge impact on countries they assess. And that in itself poses an internal dilemma to themselves.In understanding their influence on millions of ordinary citizens, an agency like Moody’s is confronted with an existential dilemma – if it downgrades a nation, it retards a country from making the necessary economic progress to uplift the lives of its citizens.Moody’s (and S&P and Fitch) therefore face a ‘catch-22’ in their modus operandi – clearly they wish to see a country avoid a downgrade yet by lowering the investment grade level, they themselves contribute to economic hardship and suffering further ex...
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