South Africa Faces Potential Credit Downgrade

The video discusses potential ratings actions by Standard & Poor's and Moody's, focusing on market expectations and currency volatility, particularly the Rand and Turkish lira. It also covers Fitch's recent ratings action and the risks they highlight, such as fiscal deficit, government debt, and economic growth projections. The central bank's growth forecast is notably low, indicating economic challenges.

Why are ratings actions by Standard and Poor's and Moody's anticipated today?

• The currency markets are stable.

• The Finance Minister was recently appointed.

• Their schedules make it convenient to release actions today.

• They have announced a definite downgrade.

What does the comparison of the Rand with the Turkish lira indicate?

• The Turkish lira is outperforming the Rand.

• A downgrade is likely for the Rand.

• The Rand is expected to appreciate.

• Both currencies are stable.

What action did Fitch take regarding South Africa's ratings?

• Issued no action.

• Maintained one level below investment grade.

• Downgraded to junk status.

• Upgraded to investment grade.

Which of the following is a risk flagged by ratings agencies?

• Stable state agency performance.

• Increasing government debt.

• Narrowing fiscal deficit.

• High economic growth.

What is the projected economic growth rate for the year according to the central bank?

• 0.7%

• 1.5%

• 2.5%

• 3.0%