Govt. to bring finances under control after Moody's lowers outlook

May 7, 2016 6:36 AM

Zuma replaced Nene with an unknown backbencher and within days was forced to replace him with the respected Pravin Gordhan, who had previously held the post.

South African Treasury Director-General Lungisa Fuzile gestures as he addresses the Reuters Economist of the Year Award ceremony in Johannesburg April 13, 2012. REUTERS/Mike Hutchings

South Africas Treasury said on Saturday that the government was bringing public finances under control despite recent "adverse political developments."

The Treasury was responding to Moody's announcement late Friday that it was maintaining South Africa's investment-grade rating while assigning a negative outlook to it.

Moody's said that it had now concluded a ratings review it launched on March 8.

There have been mounting concerns that South African government debt will be downgraded to junk this year in the face of sluggish economic growth and political ructions after President Jacob Zuma jolted markets in December by firing Finance Minister Nhlanhla Nene.

Zuma replaced Nene with an unknown backbencher and within days was forced to replace him with the respected Pravin Gordhan, who had previously held the post.

Deputy Finance Minister Mcebisi Jonas subsequently said the wealthy Gupta family, which has close ties to Zuma and his family, had offered him Nene's role.

"The confirmation of South Africa's ratings reflects Moody's view that the country is likely approaching a turning point after several years of falling growth ... and that recent political developments, while disruptive, testify to the underlying strength of South Africa's institutions," Moody's said.