Moody’s upbeat on Johannesburg’s finances despite political woes

Johannesburg, South Africa’s richest city and economic hub, received a vote of confidence from Moody’s Ratings despite a record of political dysfunction and wasted spending that’s prompted the national government to threaten to withdraw funding.

The city’s credit ratings reflect “its sound operating performance, moderate debt levels, and a large, diversified local economy, supported by prudent financial management and close monitoring of budget execution and cash flow,” Moody’s analysts Irena Krizkovska and Marie Diron wrote after a review of the city’s finances conducted last month.

“Over the years, the city has consistently maintained positive operating margins and moderate-to-low liquidity ratios,” the analysts said, while acknowledging that Johannesburg faces pressures from infrastructure backlogs and a growing population that have led to rising debt levels.

The Moody’s assessment — which didn’t constitute a rating action — seems at odds with the view of South Africa’s national government and business leaders.

In August, Finance Minister Enoch Godongwana demanded an