My father’s friend is a principled man. In the past, you would have read much into my opening sentence. Only a few days ago, my young son returned from school with a letter. A dreaded letter. In this day and age, any written correspondence received from school on paper is never a good thing. The letter advised that the term ‘best friend’ would no longer be acceptable on the school’s premises. There can be friends, but best friends no more. Who is going to break the news to the snowflakes that they can no longer have BFFs, or ‘best friends forever’, but only JFFs, or ‘just friends forever’?

So, as I said, my father’s friend is a principled man. He is wont to say: “These are my principles, but if you do not like them, I have more.”

It is said that in business there are principled institutions too. Or so legend has it. As I wrote this piece, Moody’s Investors Service had affirmed South Africa’s investment- grade credit rating and revised its credit outlook from ‘negative’ to ‘stable’. In its assessment, Moody’s stated: “South Africa’s institutions will gradually reverse under a more transparent and predictable policy framework.” It added: “The recovery of the country’s institutions will, if sustained, gradually support a corresponding recovery in its economy, along with a stabilisation of fiscal strength.” Ironically, only a few days previously, South African Airways (SAA) had reported a sixth consecutive year of financial losses. For the 2016/17 financial year, it posted a net loss of R5 600 000 000. Somehow, R5.6-billion does not convey the real loss.

You might recall that, last year, Moody’s downgraded South Africa’s investment-grade credit rating as a consequence of persistently dismal economic growth and State-owed enterprises’ (SOEs’) insatiable desire to consume cash. So, what has changed since then? Other than South Africa having inaugurated a new President and miniscule musical Ministerial chairs, very little has changed. Wait, that is not quite true – on February 27, MPs voted in favour of a motion to start a process to amend Section 25 of the Constitution to allow for land expropriation without compensation. So, the only certainty is land expropriation without compensation, while, for all else, there is but hope.

South Africa’s investment-grade credit rating is the result of insights offered by economists. If I was not a cynic, I would have cited the immortal words of Garret FitzGerald when providing insight into the mind of an economist: “That’s fine in practice, but will it work in theory?” The thing is just that other than unsubstantiated hope and the anticipation of the South African government honouring its noblest of economic intentions, there is no substance. Nothing of economic substance.

Could there be a reason for Moody’s not downgrading South Africa’s credit rating a notch further? Had it been any other South African government, including the one led by Jacob Zuma until recent months, it is highly unlikely that Moody’s would have made the same argument and reached the same conclusion.

So, why no downgrade? Had Moody’s downgraded South Africa’s credit rating, the country would have been automatically removed from the Citi World Government Bond Index, forcing asset managers to sell South African bonds. Had this happened, billions of rands would have left (read ‘fled’) South Africa. I do not have to tell you what this would have done to the value of the rand, which is, in effect, the share price of South Africa Inc.

South Africa may have dodged the proverbial bullet, but for how much longer? If South Africa was assessed on objective economic principles, then its bonds would have been sold.