Ratings cuts could lead to capital outflows - Sarb

(iStock)
(iStock)

Pretoria - The impact of a possible further ratings downgrades on the South African economy and financial system could lead to increased capital outflows, the SA Reserve Bank (Sarb) said on Tuesday.

Ratings agencies have warned of possible ratings cuts should Pretoria show a lack of commitment to reining in its budget deficit.

The warnings came after President Jacob Zuma changed finance ministers twice in less than a week in December, initially replacing Nhlanhla Nene with a little known politician before recalling Pravin Gordhan to the post to calm markets after a run on the rand and bonds.

Standard & Poor's and Fitch rate South Africa a notch above sub-investment grade, while Moody's has it two notches above.

"The impact of a further ratings downgrade on the South African economy and financial system could manifest in the form of capital outflows (and) potential spillovers to rand-denominated ... government debt," the central bank said in its financial stability review.

ZAR/USD
16.90
(+0.01)
ZAR/GBP
21.32
(+0.11)
ZAR/EUR
19.09
(+0.50)
ZAR/AUD
11.76
(+0.55)
ZAR/JPY
0.16
(+0.14)
Gold
1801.77
(-0.31)
Silver
18.63
(-0.16)
Platinum
830.00
(-1.93)
Brent Crude
43.32
(+0.49)
Palladium
1949.74
(+1.97)
All Share
55934.33
(+0.11)
Top 40
51536.91
(-0.04)
Financial 15
10339.64
(+0.63)
Industrial 25
77428.31
(-0.10)
Resource 10
52587.29
(-0.39)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1866 votes
I am taking a hit, but should be able to recover in the next year
23% - 2441 votes
My finances have been devastated
34% - 3627 votes
It's still too early to know what the full effect will be
25% - 2617 votes
Vote