(Bloomberg) -- Rating companies Moody’s Investors Service and S&P Global Ratings responded positively to decisions taken in South Africa’s budget, Treasury Deputy Director-General Monale Ratsoma said.
“They were very positive,” Ratsoma said in an interview in Cape Town on Wednesday after a team from the Treasury held teleconferences with Moody’s and S&P. “They indicated areas of concern after the medium-term budget policy statement and I think they must agree we’ve addressed all of those.”
Treasury officials will speak with Fitch Ratings Ltd. on Thursday, Ratsoma, who is in charge of economic policy, said.
Finance Minister Malusi Gigaba announced tax increases and spending cuts to narrow the fiscal deficit and curb debt in his budget speech. Fitch and S&P lowered South Africa’s foreign- and local-currency credit ratings to non-investment grade last year, citing policy uncertainty and concerns about the management and finances at state-owned companies. Moody’s has the country on review for a downgrade to junk and may make an announcement on March 23.
Should Moody’s reduce the local-currency debt to non-investment grade, South Africa will exit the Citibank World Government Bond Index, sparking forced sales by investors who track the gauge and leading to outflows of as much as 100 billion rand ($8.5 billion) in the nation’s bond market, according to Citigroup (NYSE:C) estimates.
Avoiding a cut by Moody’s is the Treasury key focus at the moment, Gigaba said in a separate interview.