There is a pamphlet on the website of the Treasury that seeks to explain headline sovereign credit ratings in layman’s terms. It uses, as an explanatory device, descriptions of how a bank would treat a country as if it were an individual customer, at different points on the ratings scale.
Banks will not only lend you money at a very low interest rate if you are AAA rated, the reader is informed, but they will also offer you wine, tea, juice or anything you want if you enjoy such a rating. As you go down the scale, the interest rates are higher and the catering more basic. If you are deep into junk status, in the C ranks, it is only mashonisas who are willing to lend you money at punitively high interest rates.
The pamphlet, an accessible and humorous guide to ratings, speaks to the way the assessments of credit ratings agencies have made their way into mainstream consciousness. It hasn’t always been so.
Few South Africans can tell you when the country established itself as investment grade at the various agencies. Now, their pronouncements are keenly awaited. Across society, from left-wing academics to conservative businesspeople, the descent towards junk has come to signify the failings of the South African economy.
Commentators across the spectrum might ascribe the failure to different and often conflicting causes, but the benchmark has become the same.
In local economic debates, this has been taken too far. For some time, it was the imagined foreign investor who was used as the bogeyman to get the government to behave with economic prudence. If you do this, you will scare away foreign investment; if you do that, you will attract investment. Now it is the credit ratings agency.