A closing with a ratings and a market analysis off the budget speech or eyes were Auntie Don't winning for this budget as investors set on the edge of their seats for the upcoming will.

Rather do continue to sit on the edge of their seats for the upcoming Moody's rating, which prior to the budget that was delivered earlier today was suspected to be a downgrade.

Has that changed?

And what are the views off other ratings agencies to South African spending and collection plans?

Let us find out what is in studio.

I do have with me Carrie Friend, the CEO of Alfa Wealth, Tonga, Rhys Iki, the sovereign analyst at S and P Emerging Markets and Adrian several, the CEO of Cannon Asset Managers.

But before we get into the conversation, a quick look at the market well, it is.

The question that remains on everybody's lips was the budget speech that was delivered by a finance minister, Diethelm Winnie, enough to avoid a ratings downgrade by Moody's, but not only Moody's to avoid a further ratings downgrade from other ratings agencies like s and P, perhaps.

Or who better to answered that question?

That's that's hunger.

You join us in studio, and we have to know from a ratings for effective your view on the budget that was delivered by the finance minister.

Thank you for thank you for the opportunity, I think.

Let's put it this way.

We last changed our outlook on South Africa in November 2019 following the presentation off the M, V, P S and M.

To be Pierce Waas, a weaker best line than what we had.

So what the budget is done now is toe ofem, the MTV Pierce best line, however, that information off that broad from Wick is unchanged, but it comes with different dynamics to dynamics.

One is lower economy growth, which is now a reality, as well as the deficits that are higher reality.

But the adjustment process is going to have to come from adjusting wages.

The public sector, which bill which lead us into the politics off the government, the politics of the the politics off the trap, a tight alliance so broadly the framework is unchanged from the empty yes, so what it does is to give time to the government to for a pet for us as well, to see how realistic the government assumptions are going to be.

Can they get what they want from the unions?

If they can do that, maybe that can help the fiscal from weak.

And that can help.

Keeping the outlook for a long appeared so unchanged possibly could not be a bad thing.

Adrian and carry to bring you in here because we weren't only talking about a Moody's downgrade.

We're talking about the possibility of upsetting other ratings agencies.

So if S and P is saying that we're still mutual, a computer opposition there in November.

Is this a positive from you guys?

Adrian, I think the reading is pleasantly surprising and the currency responded with Wow, that was a bit of a rabbit out the hat.

So that was all down to the boat.

It wasn't global factors.

Look, there were some afternoon factors that mattered, but if you look at the rant move, it was more than a market open in the Europe.

In the United States, there was a local factors going on.

Having said that, you know, the real elephant in the room is the 1 60 billion, and it's all good and well to talk about taking 1 60 billion out of the wage bill.

Let's see it come out.

You don't sound confident that would will, but will probe you further on that.

That scary just to bring you in on your views off the budget and also the statement that has just been made by S and P saying that it's pretty neutral.

Absolutely.

And that's good news.

And I'm glad to hear that.

And that makes a lot of saints.

I mean, I think a CZ both the Sanhedrin have commented.

It's making all the right noises, you know?

Can you balance the needs of us are two and the other unions, you know, because that's gonna be the big trick care and the question still to be answered.

All right, so it's balancing those knees.

I mean, the finance minister saying that their consultations or talks are happening behind closed doors.

The proof will be in the pudding, will wait to see.

I'd just like to get your views on some of the announcements that were made regarding a key affect is in the economy.

Let's just begin with s come.

And some of the changes they all right, is calm down, get a bailout this time around.

But there was quite a number of new initiatives I put on the table.

They just do a views on the government's plans to push ahead with its plans to restructure its come.

Yeah, I mean, from our perspective, we don't think that they're a lot off initiatives that I knew one escort today, There could have been more.

So we've been with the challenge.

Off s come.

I think for a while now, if you are looking for more immediate radical reforms on sa Ys, you can see the process that has gone on with S A with the business rescue, they immediately launched the process toe cut roots and also to consider reducing employment.

Right, that's more radical.

And in a sense, this is from an independent party that is trying to look at financial sustainability.

I don't think that some of the announcement made today actually go directly to addressing the financial sustainability off esque.

Um, is it what is in place is too cool.

Continue with the UN bundling or putting into functional separation off units so that they can see the course.

So we're still kind off in the same ballpark.

No measures asides to try and make us come better.

All right.

So what was reiterated was the fact that the big Window four and renewable energy would be accelerated.

But don't boot.

Big Window five given more momentum the i.

R P plan and now it's the national regulator that just needs to give the thumbs up.

And also municipalities who can afford candor by electricity directly from independent power producers.

You're saying that this doesn't move the needle in terms of this comes back on sheet, I think, in terms of escorts Palin City s.

But I think in the near Tim the energy supply situation is still going to be constrained.

But I think it's a welcome issue that you can have more suppliers producing energy, whether it's from the I.

P.

P s or it's from whichever area that can come, that is welcome.

But perhaps what is more, it's not just the production, but also perhaps if other operators can also used different channels at an escort, because all of that production was to rely on Eskom.

So if escort can be sorted.

It can help all of the new players that are coming onto the greed to help increase the energy supply.

Alright, I must say, Adrian, carry it is gonna take some time to get used to seeing underrated.

They're sitting in Parliament.

I'm so accustomed to seeing him in, um, annual general meetings or delivering statements at the J.

C.

But what were your views?

Are did some of the pronouncements made with regards to this company.

So with the S O is more broadly, the thing that worries me is the hole is much bigger than the numbers that they're being put on the table.

And Iskan needs much more money than the number on the table.

So this is Band Aid.

It's not a fully fledged rescue.

Um, and and you know, why don't we know that number's still Eskimo is a real drag on the economy.

We're talking about a better growth environment, but it's hardly enough off a growth environment to get the ratings agencies to change their perspective.

On South Africa, I was gonna say to get us off your backs, but look, it's better, but it's not good enough.

And if you wind backwards.

The bailout money proposed over the next three years for S.

O.

S is as much as was granted over the last 10.

So these are big numbers that we're talking about, and it's great that the discipline has been brought to s a.

Now it's time for this great big, single country risk in the form of escape.

That entity has to be sorted out.

I'm Carrie.

I wondering.

I'm wondering if you actually ahead a peek at perhaps how this compounds reacted to some of the pronounce its pronouncements that were made and also your view on, um, the plans for sa Ys is come essay.

And I think he spoke about merging a couple of public sector entities as well.

Thanks for FDR.

Didn't actually look at the Eskom Bonnie's.

So I haven't seen how they reacted.

T E o.

I think just in general it's the rhetorical is definitely pleasing to see that they're starting to take specific action.

There are these measures of austerity, that air coming in, I think you know, Tito was his usual sort of candid self around that and that, you know, that was good to see.

I think What everyone is crying out for now is action and detail never run from the ratings agencies and all the way through to the market.

You know, obviously the budget had a very friendly consumer element to it.

You know that I think will bode well for business and consumerism within our country.

But certainly, you know, a lot of focus was put on reducing this expenditure ball, which goes all the way from how much money re pumping into these s O is which I think is what Finance Minister was trying to address all the way through to public wage.

But we're trying to show Bill Cheddar, Bart, but yeah, it's it's time for detail now and it's time for action.

With growth levels off what they're forecasting up to 29 it's better.

Look, all of the capital markets were better.

Isei in queen Much better.

Yeah, we saw that in the just before the show the Randalls better bonds, or better including Eskom Bonds.

So this was well received.

But, you know, I think the reality is it's well received versus what could have.

Bean and I went on social media last night, sort of giving my very glib forecast, and I'm been pleasantly surprised.

I suspected that in some shape or form they would have to be, Ah, higher TexPool.

That hasn't happened.

In fact, the exact opposite has happened.

We've been given, Ah, a bracket creep.

Relief, whatever.

The opposite is our fiscal drag.

And there is a really tone off intent aboutthe wage bull.

Yeah, I think perhaps that coming from you yeah, maybe it is a good thing, actually, that the sam realization on the realities facing South Africa that perhaps to get your fiscal consolidation is no longer really possible to do it through text revenue increases so that introspection has to come from expenditure adjustment.

And this is the first step, I think, in that expense adjustment.

I'll give you an example.

Brazil.

You probably see quite a number of similarities between Brazil and tell Evita.

Five years ago, Brazil, Was it the separating with South Africa investment grade Triple B minus?

Then Brazil lost its way faster than South Africa, and I think the rating is now bottomed.

It double B Minor's right, which is lower than South Africa.

But Brazil also had a new dispensation in your political leadership in government.

But what they've done now is to actually go ahead with a difficult choice on pension reforms.

Right?

And you're actually seeing.

I think the numbers are still weak, But you can see some improvements in the debt in the fiscal and what we then did in December, last year's to provide the post about Look on Brazil, noticing the difficulty pension forms that have been done by the leadership there, which helps to then put your frisco in debt on a sustainable path.

So it's important that the path that South Africa is going onto to engage with the unions to find that expenditure adjustment that can it least result in fiscal deficits coming down, debt to GDP stabilizing.

If that can happen, then perhaps you could see the trajectory off ratings being different.

So it's not all negative, but it's about following through on the commitments put on the table.

All right, let's discuss the state Bank.

We got a bit off detail.

I don't know how much it was a fool.

You guys here at the table to have an idea of what the state is looking to do with the state Bank.

But your views on that and exactly how they are hoping it will work here.

I think there wasn't much detail on the state Bank, so but certainly from what I've gleaned was that obviously they're looking to develop a fully fledged retail bank.

I'm not sure, uh, I struggled to understand the rational for the state Bank, and I'm not sure that it's where our if it's on our expenditure should be going.

You don't have to be convinced, you know, as a market participant, I guess you know by government that we require a state bank.

You know, I think it's similar in some ways to the, you know, the sovereign wealth funds, you know that they're talking about.

But I think you know, separate matter, obviously, but I think it requires some justification.

There's so many things that we need thio spend our money on and inspire confidence with.

In order to bring that to the market, we need confidence.

I'm going back Thio Donna's point around Brazil.

You know, you have certainly seen that some of the confidence is creeping back into markets because they are showing ability to reform and ability to make the hard calls And when you get confidence combined with value, we were just talking about our small and midcap dictator.

Now, while we're waiting outside, you know, then that's the catalyst for re rating in terms of asset prices, both currency and risk asset prices.

And that's really what we need.

And I think this was a great first step.

I'm not sort of knocking to those, you know, Budget.

There was a lot of confidence that kind throughout, and a lot of rating on the sea of sustainability.

Just one last point on the state back agent, do you get the rational off where the states is going?

Look, it's hard if you follow through the common tree that has evolved over a couple of years around this.

You can see the I think that political imperative behind it.

But the commercial imperative is harder to reconcile.

If it's big industrial than that already exists on, you've got that in the form off the defies, like the DBS a or a D T I A.

C I.

D.

C.

Sorry.