Moody's downgrades South Africa debt by a notch, raises outlook

A sign for Moody's rating agency on the front of company headquarters in New York, September 18, 2012Ratings agency Moody’s downgraded South Africa’s Baa1 sovereign debt rating by one notch to Baa2 on Thursday, and changed the outlook to stable from negative. The ratings agency noted in its outlook revision that there were “poor medium-term growth prospects due to structural weaknesses, including ongoing energy shortages as well as rising interest rates”. Moody’s however said policymakers in Africa’s second largest but most developed economy had shown “commitment to reining in government debt growth over the medium term and the broad political support for a macroeconomic strategy”. South Africa’s treasury lauded the agency’s decision to assign the country a stable outlook saying it “affirms government’s commitment to fiscal discipline”.

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