Publications
Partners
South Africa suffered another ratings downgrade this week as Moody’s Investors Service raised concerns about the country’s “weakening” institutional strength, policy uncertainty and rising public debt.
Moody’s, which is seen in the governing ANC circles as “not hostile”, was expected to keep South Africa above sub-investment grade after a recent high-level meeting with ANC and government officials.
The agency on Friday downgraded South Africa’s long-term foreign and local currency debt ratings, and maintained a negative outlook, concluding its decision to place the sovereign under review for a possible downgrade.
Treasury said a downgrade was “still an investment grading”.
“While the ratings are still investment grade, the negative outlook indicates that the risk of further downgrades is still there,” Treasury said.
The ANC yesterday said the latest downgrade was a wake-up call to government, business and organised labour to urgently “alter our economic trajectory and boost confidence in our economy”.
Party spokesperson Zizi Kodwa said the solution was to get more private sector investment in the local economy, less labour disputes, prudent government spending and the improved running of weak state-owned entities and state institutions in general.
Kodwa said that, to help reverse the downward trend in the economy, the ANC committed to being transparent and would listen closely to different views “in the process of assessing and, if necessary, reviewing policy”.
At the end of the month, the ANC will host its national policy conference, which is a mid-term review of the party’s policy positions in between national conferences.
The next national conference is scheduled for December.
“We have confidence that, where any uncertainty or ambiguities still remain in terms of the ANC’s policy framework, these will be settled decisively by these important gatherings of our people,” Kodwa said, adding that “the outcomes of these gatherings will result in an improved investment climate and should trigger a positive review in the coming months”.
Treasury urged “all South Africans, including the private sector and trade unions, to work even harder together to address these concerns”.
It said that “policy transparency and continuity remain on top of government’s agenda and the [ANC] in 2017”.
The outcomes of the ANC conferences this month and in December were not expected to translate to policy changes, said Treasury.
It said that “the publicly announced draft policies should cement concerns of policy deviations in the next five years”.
Finance Minister Malusi Gigaba was expected to lead the charge in “reigniting confidence, as well as reclaiming and maintaining the investment grade ratings”.
Gigaba would ensure that the joint work of government, business, labour and the civil society continued at a faster pace.
