Moody’s upgrades Cape Town’s credit rating

The City of Cape Town has recently received a ratings upgrade from Moody's with a stable outlook, signaling a positive shift in the city's financial standing. The ratings agency attributed the upgrade of Cape Town's long-term debt by one notch to Ba2—aligning it with South Africa's national rating—to strong financial management and very strong liquidity despite challenging financial conditions and a low-growth environment. This news comes as a welcome acknowledgment of the city's efforts in maintaining financial stability and resilience in the face of economic adversities. Mayor Geordin Hill-Lewis, who has been instrumental in advocating for the city's improved rating, highlighted the importance of distinguishing Cape Town's financial standing from the broader South African landscape. In an interview with CNBC Africa, Mayor Hill-Lewis emphasized that Cape Town's financial position deserves a higher rating due to its robust balance sheet and effective financial management practices. One of the key factors contributing to Cape Town's success is its proactive approach to revenue collection. The city has built a strong payment culture over the years, encouraging residents and businesses to pay for the services they use. This commitment to revenue collection has enabled Cape Town to generate around 82% of its own revenue, setting it apart from other municipalities facing challenges in this area. Moreover, Mayor Hill-Lewis addressed concerns about affordability, acknowledging that some residents may struggle to keep up with payments amid economic uncertainties. While Cape Town offers competitive tax rates compared to other metropolitan areas, the mayor recognized the need to support residents facing financial pressures by fostering economic growth and stability. Another significant aspect of Cape Town's financial strategy is its focus on infrastructure spending. The city has allocated a substantial budget of 40 billion over the next three years to enhance its infrastructure and bolster resilience against climate risks. Mayor Hill-Lewis underscored the importance of continuous investment in infrastructure to sustain the city's growth and functionality. However, challenges loom on the horizon, particularly regarding government allocations and budget cuts. Mayor Hill-Lewis expressed concerns about potential reductions in infrastructure funding, citing the adverse long-term effects of such cuts on the city's development. With ongoing budget discussions and uncertainties surrounding government support, Cape Town remains vigilant about safeguarding its financial health amid changing fiscal landscapes. The interview also delved into political dynamics, with Mayor Hill-Lewis reflecting on the government of national unity and the need for collaborative decision-making. Despite recent budgetary conflicts, the mayor remained optimistic about the sustainability of the government of national unity, emphasizing the importance of shared governance for the country's economic prosperity. In conclusion, the City of Cape Town's ratings upgrade reflects its commitment to sound financial practices and prudent management in a challenging economic environment. As Mayor Geordin Hill-Lewis continues to advocate for the city's financial interests, Cape Town stands as a beacon of financial stability and resilience in South Africa.