SA has done enough to prevent a further sovereign downgrade, economist says

South Africa braces itself for a crucial moment as Moody's Investors Service gears up for a review of the country's sovereign credit. With the nation's debt already in 'junk' status, the looming question is whether Moody's will further downgrade the rating. Annabel Bishop, Chief Economist at Investec, anticipates the review and shares insights on the potential outcomes in an interview with CNBC Africa. Bishop expresses optimism that South Africa has taken adequate measures to avert another credit rating downgrade. She points out that the recent budget improvements and fiscal consolidation efforts by the government may sway the credit rating agencies to maintain the current status quo. While Standard and Poor's is not expected to revise the rating due to the absence of a negative outlook, Moody's and Fitch pose potential risks. However, Bishop remains hopeful that the country's positive budget performance and strategic plans could influence the agencies to adopt a wait-and-see approach. The recent surge in commodity prices has bolstered South Africa's revenue projections, depicting a favorable outlook for the fiscal year. Despite this windfall, rating agencies emphasize the importance of adhering to expenditure ceilings and implementing effective cost-saving measures, especially concerning civil servant remuneration. Moreover, addressing the impact of state entity debt and resolving financial challenges facing entities like South African Airways could fortify the nation's economic trajectory. The conversation shifts to the vaccination rollout program, a pivotal factor in gauging South Africa's economic recovery. The slow pace of vaccination distribution has raised concerns among agencies like Moody's and Fitch, who anticipate a subdued growth outlook for the country. Delays in vaccine procurement and distribution may hinder South Africa's GDP recovery, prompting a cautious sentiment from credit rating evaluators. Bishop acknowledges the sluggish vaccination efforts but underscores the urgency for economic reforms to accelerate growth and mitigate the risk of credit rating downgrades. She highlights the necessity of swift policy implementation to create a conducive environment for economic expansion and revenue generation. As South Africa navigates the challenges posed by the pandemic and economic uncertainties, stakeholders eagerly await the outcome of Moody's review and its potential implications on the nation's credit rating. The resilience and responsiveness of the government in addressing key fiscal issues and advancing structural reforms will play a crucial role in shaping South Africa's economic outlook in the months ahead.