South Africa is disappointed by Moody' s decision to cut the country's ratings outlook and disagrees with the agency's assessment of political risks, the National Treasury said in a statement on Wednesday.

Political debate and a vigorous exchange of policy options must be expected in a democracy. This cannot be construed as political instability, it said in a statement.

Moody's cut South Africa's A3 rating outlook to negative from stable, voicing concern that pressure from unions and black voters wanting greater economic redress for the ills of apartheid could erode the country's finances.