South Africa's Mboweni will aid Ramaphosa reform push

2018 ◽  
Keyword(s):  
South African ◽  
Credit Rating ◽  
Short Term ◽  
Content Type ◽  
Rating Agencies ◽  
Reserve Bank ◽  
Freedom Fighters ◽  
Left And Right ◽  
The Government

Significance A former South African Reserve Bank (SARB) governor and minister of labour, Mboweni faces a crucial first few weeks in his new post as the government attempts to placate rating agencies and engineer an economic turnaround. Mboweni’s initial moves may be determined by Moody’s credit rating review expected today. Impacts In the short term, Mboweni’s appointment will be a boost for Ramaphosa’s bid for fiscal consolidation and growth. In the medium-to-long term, Mboweni will likely prove a more polarising figure inside the ANC than Nene. Allegations linking the Economic Freedom Fighters with a major banking scandal could give Mboweni and the ANC an early political 'win'. Mboweni's previous social media utterances could be further exploited by opponents, both left and right, in the months ahead.

South Africa's parastatals face growing turmoil

2017 ◽  
Keyword(s):  
South African ◽  
Credit Rating ◽  
Partial Solution ◽  
The State ◽  
Power Utility ◽  
Content Type ◽  
Rating Agencies ◽  
Additional State ◽  
The Government ◽  
State Financing

Significance This comes amid reports that the state-owned airline will shortly receive a 10-billion-rand (760-million-dollar) bailout from the government, with almost 7 billion rand in debts due to lenders by September 30. The performance of South Africa's state-owned enterprises (SOEs) has featured prominently in rating agencies' downgrade assessments; Moody's cut embattled power utility Eskom's credit rating in June. Impacts The dismissal of SOE officials implicated in Gupta-related corruption allegations will prove only a partial solution to institutional rot. Dampened growth of between 0.5-1.0% this year could be further worsened by additional state financing of SOEs. The South African Reserve Bank's recent mandate court victory will only temporarily allay concerns over its institutional independence.

Portuguese coalition parties may clash over austerity

2016 ◽  
Keyword(s):  
Economic Growth ◽  
European Commission ◽  
Budget Deficit ◽  
Banking Sector ◽  
Content Type ◽  
Rating Agencies ◽  
Structural Funds ◽  
The Government

Significance This reflects the significant risks lying ahead for the government despite the European Council's decision on August 9 to waive fines for Portugal over its excessive budget deficit in 2015. Impacts The European Commission retains the possibility of suspending structural funds for Portugal. The decision to waive the fine could undermine the credibility of EU rules in the long term. Slower economic growth and the weak banking sector could lead to Portugal being downgraded by rating agencies.

Brazil faces stagnation risk in 2017

2017 ◽  
Keyword(s):  
Government Spending ◽  
Pension Reform ◽  
Investment Decisions ◽  
Fiscal Crisis ◽  
New Wave ◽  
Short Term ◽  
Business Investment ◽  
Content Type ◽  
The Government

Subject The risk that the Brazilian economy will stagnate, rather than recover, this year. Significance The recent passage of legislation freezing government spending and the ambitious pension reform currently under discussion in Congress are the flagship policies of the government of President Michel Temer. Both seek to defuse Brazil’s fiscal time bomb in the long term. However, they offer little support to immediate expansion in an economy that not only has been in recession since the second quarter of 2014 but is also locked in a low-growth trap will few apparent short-term escape routes. Impacts Popular dissatisfaction may trigger a new wave of demonstrations, further weakening the government. As long as the fiscal crisis persists, the government’s ability to stimulate the economy will be limited. Political risk will be a crucial factor in business investment decisions in Brazil.

Chile spending commitments may hamper fiscal prudence

2018 ◽  
Keyword(s):  
Government Spending ◽  
Credit Rating ◽  
Gdp Growth ◽  
Credit Rating Agencies ◽  
Government Budget ◽  
Content Type ◽  
Rating Agencies ◽  
The Government ◽  
Fiscal Prudence

Subject The draft 2019 budget. Significance The government budget for 2019, announced by President Sebastian Pinera on September 29, is the most austere in almost a decade. It aims to restore Chile’s long-standing reputation for exemplary fiscal conduct, which in recent years has been undermined by increases in government spending that outstrip GDP growth, and the resulting increase in borrowing. Impacts Credit rating agencies have indicated that the draft budget is in line with their concerns about Chile’s rising borrowing requirement. The ongoing decline in fiscal revenues from copper underlines Chile’s need to diversify its economy. The government will be hard-pressed to meet its fiscal goals if, as current forecasts suggest, GDP growth weakens through to 2020.

South African lockdown easing will only do so much

2020 ◽  
Keyword(s):  
South African ◽  
Short Term ◽  
Content Type ◽  
The Government ◽  
Do So ◽  
Alcohol Sales

Significance President Cyril Ramaphosa, who had been under escalating pressure from business and organised labour to reopen the economy fully, justified the relaxation by citing reductions in new case figures. There are indications that all provinces may have reached their peak of infections by end-July. Impacts Despite the scale of the crisis, the government appears still to lack urgency in formulating a substantive economic response. Government's withdrawal of an appeal to a 2018 declaratory order will raise hopes for greater flexibility with miners in the short term. Lockdown-related drops in reported crimes will likely prove short-lived, given renewed alcohol sales, growing joblessness and hardship.

South African mining could ride out lockdown period

2020 ◽  
Keyword(s):  
South African ◽  
Power Supply ◽  
Economic Impacts ◽  
Policy Uncertainty ◽  
Short Term ◽  
Community Based ◽  
Content Type ◽  
Financial Position ◽  
Cast Doubt ◽  
The Government

Subject South African post-lockdown mining. Significance Three weeks into its COVID-19-related lockdown, the government allowed certain mines to ramp up to 100% capacity (coal and opencast operations) and others to 50% (underground operations), making it the first non-essential industry allowed to resume full or partial operations. This particularly benefits smaller, more marginal mines, as larger ones were already in a relatively resilient financial position. However, more fundamental issues continue to weigh on the industry, such as costly and erratic power supply and ongoing policy uncertainty. Impacts An extended lockdown and the economic impacts of the COVID-19 crisis could see a rise in community-based protests interrupting operations. A surge in COVID-19 infections at mines and subsequent closures will cast doubt over the feasibility of the industry's short-term strategy. The growing financial stress on workers may prompt more militant demands during scheduled coal wage negotiations later this year.

scholarly journals Wpływ COVID-19 na nastawienie i credit ratingi krajów

2020 ◽  
Vol 8 (4) ◽  
pp. 535-564
Author(s):  
Patrycja Chodnicka-Jaworska
Keyword(s):  
Financial Crisis ◽  
Foreign Currency ◽  
Credit Rating ◽  
Credit Ratings ◽  
Short Term ◽  
Rating Agencies ◽  
Thomson Reuters ◽  
The Impact ◽  
The International Monetary Fund

Covid-19 Impact on Countires’ Outlooks and Credit Ratings The aim of the study is to examine the impact of the financial crisis caused by COVID-19 on chang­es in outlooks and credit ratings of major rating agencies. The research hypothesis was as follows: the financial crisis caused by COVID-19 negatively affected the change in outlooks and credit ratings of countries. The study used long-term and short-term credit ratings and outlooks collected from the Thomson Reuters / Refinitiv database regarding liabilities expressed in foreign currency and macroeconomic data from the International Monetary Fund databases, for 2010–2021. The analysis was carried out using ordered logit panel models. The presented results showed a weak significant im­pact of the COVID-19 pandemic on credit rating. The agency that changed its notes in connection with this situation is Standard & Poor’s (S&P). However, the attitude responded to the situation un­der investigation. During the crisis, country ratings have become less sensitive to growing debt, which may be dictated by widespread loosening of fiscal policy. The rate of GDP growth has a par­ticular impact during the COVID-19 period in the event of a change of outlook. Rising inflation is particularly dangerous in the age of pandemics. It may be related to monetary policy easing.

Russia readies for long economic struggle

2015 ◽  
Keyword(s):  
Economic Policy ◽  
Credit Rating ◽  
Social Spending ◽  
Content Type ◽  
Economic Plan ◽  
Rating Agencies ◽  
European Trade ◽  
The Government ◽  
Key Industries ◽  
Sovereign Credit Rating

Significance The currency, which has fallen 14% against the dollar so far this year, fell another 3% in morning European trade, sinking below 70 to the dollar. The rate cut comes after the January 26 downgrade by international ratings agency Standard & Poor's (S&P) of Russia's sovereign credit rating to junk status (from BBB- to BB+) and the January 28 announcement of an economic plan that will see the government spend 2.34 trillion rubles (35 billion dollars) to bolster key industries, including banks, and to boost its troubled economy particularly in the regions. As part of the measures, Moscow plans a 10% cut in the budgets of all but a handful of ministries. Defence, agriculture and social spending are spared. Impacts Discussions between liberals are not as important to economic policy as they were. Further measures to boost the economy are likely in order to forestall more rating agencies downgrading Russia to junk status. The Security Council will exert greater influence over economic policy, further marginalising economic liberals.

Weak growth to weigh on South Africa's credit rating

2016 ◽  
Keyword(s):  
South African ◽  
Credit Rating ◽  
Good Governance ◽  
Content Type ◽  
Rating Agencies ◽  
Presidential Succession ◽  
Capital Outflows ◽  
Weak Growth ◽  
Investment Grade ◽  
Levels Of Support

Subject Outlook for South Africa's sovereign rating. Significance Recent decisions by the three main credit rating agencies to retain South Africa's investment-grade status following their respective mid-year reviews was met with relief within business and government circles. A downgrade to junk status risked a sharp depreciation in the rand, rising debt burdens, significant capital outflows and almost certain recession. The agencies will conduct their next reviews in December. Impacts Intra-ANC factionalism linked to the presidential succession will intensify after the municipal elections in August. If the ANC loses significant levels of support in major cities, its members may blame Zuma, possibly hastening his departure. Increased censorship by the state-owned South African Broadcasting Corporation will undermine good governance. High unemployment will persist, which, together with interest rate hikes, will dampen prospects for a recovery in consumption growth.

Inflation 'solution' should help avoid Brazil default

2016 ◽  
Keyword(s):  
Sovereign Debt ◽  
Credit Rating ◽  
Case Scenario ◽  
Current Crisis ◽  
Content Type ◽  
Rating Agencies ◽  
Primary Deficit ◽  
Political Conditions ◽  
The Government ◽  
Investment Grade

Significance Days before this announcement, the government asked Congress to approve a primary deficit of up to 96.65 billion reais (some 1.5% of GDP) for this year. The sharp deterioration in fiscal performance in recent years led the three main credit rating agencies to strip Brazil of its investment grade status between September 2015 and February 2016. A profound and prolonged recession and dysfunctional politics that make it difficult to address Brazil's fiscal shortcomings have also increased concerns over the sustainability of the country's sovereign debt. Impacts The depth of the current crisis could lead to political conditions for bolder economic reforms. However, that best-case scenario is out of reach for the current government. Even fortunate future governments would only enjoy a narrow window of opportunity to seek ambitious reforms.

Sign in / Sign up

Export Citation Format

Share Document