2009-09-09: Joburg receives a Stable Outlook from Fitch Ratings
THE City of Johannesburg is pleased at having received a Stable rating Outlook from Fitch Ratings today.
Fitch Ratings, a reputable international credit rating agency has affirmed Joburg's Long-term National rating at 'AA-(zaf)' and its Short-term rating at 'F1+ (zaf)'.
Member of the Mayoral Committee for Finance, Councillor Parks Tau says, "We are extremely delighted by this positive rating that will reassure investors and our citizens alike of our capability to prudently manage our finances during this global economic recession. We understand the difficulties faced by everyone but believe that with time and responsible behaviour, payment levels will improve".
As indicated in their rating, Fitch expects Johannesburg's economy to fare better than the expected 1.5% contraction at the national level and to eventually fend off the recession due to public sector works related to the 2010 Fifa World Cup and tourism.
"While it is a common practice in the City to review the funding plan annually as part of the budget process, the current year is unique in view of the credit crunch and the general economic conditions" says Cllr Tau.
Continuing he says, "We had to stress test all the assumptions around payment levels, affordability, revenue collection and also look at appropriate ways to raise funding in this environment. Very importantly we are committed to keeping our debt stock at about 55% of revenue under the circumstances and interest below 7% of costs".
Cllr Tau said that by nature local governments are political institutions closest to the public they serve. He said that the City owed it to ratepayers to ensure continuous improvement and up scaling of risk management to guarantee acceptable levels of liquidity as well as service delivery.
City Manager Mavela Dlamini says, "The story of our credit rating has been an incredible one of gradual but continuous improvement over the last five years and to receive this positive outlook in the midst of the recession says the business of the city is indeed in a healthy state. This position challenges all in our communities and customers alike to do their bit in retaining a positive position in the global economic environment and we truly do appreciate role efforts too".
In February of 2009, the City received its consecutive unqualified report from the Auditor General and in May 2009 announced a budget of R26.3billion, the biggest municipal budget in the country.
Issued on behalf of:
Councillor Parks Tau
Member of the Mayoral Committee for Finance
Issued by:
Virgil James
Spokesperson
City of Joburg
082 467 9415
