Cape Town – President Jacob Zuma said he is in favour of plans to set up a credit rating agency which would be more sympathetic to the needs of Brics nations.
Zuma was responding to questions in the National Council of Provinces on Tuesday when he was asked about his view on a separate credit rating agency for Brics nations to better cater to developing economies.
On October 16, Brazil, Russia, India, China and South Africa – collectively known as the Brics countries – resolved to establish their own credit rating agency to better cater to developing economies, rivalling existing ones based in developed nations.
On the same question, Zuma also said ratings agencies are “very important”, as their ratings of a country’s sovereign debt and its ability to pay back borrowings give an indication to investors whether to invest in a country.
“We take ratings agencies and the work they do very seriously,” Zuma said during a question and answer session. “It is another mechanism through which government can take stock of the work it's doing."
Zuma said his government approaches fiscal policy “prudently”.
“We always seek to ensure there’s macroeconomic stability and that our public finances are sustainable. This has no doubt helped preserve South Africa’s credit rating. We take the agencies and the work they do very seriously,” Zuma said.
“But although they’re important, their ratings don’t necessarily have an impact on the agreements and commissions South Africa have entered into with other countries.”