Publications
Partners
Cape Town - The South African Federation of Trade Unions (SAFTU) said on Sunday it is angered at the latest decisions by ratings agencies.
Global ratings agency S&P Global Ratings on Friday evening downgraded South Africa's long-term local currency rating to 'BB+', or junk, from 'BBB-' with a stable outlook, while Moody's has placed the country on review to be downgraded.
S&P also further lowered SA's long-term foreign currency debt to 'BB' from 'BB+', meaning this debt is now on the second rung of non-investment grade.
Moody's Investors Service then announced that it had placed the Baa3 long-term issuer and senior unsecured bond ratings of the government of South Africa on review for downgrade.
Both announcements occurred after 23:00 on Friday.
On Thursday Fitch affirmed SA's long-term foreign and local currency debt ratings at ‘BB+’ - commonly known as "junk" - with a stable outlook.
"It is outrageous that these unelected enforcers of the big multinational monopoly corporations can wield such power to force governments to bend to the will of the rich and powerful, and use downgrades to blackmail them into carrying out policies which will bring even more misery to the working class and the poor," SAFTU said in a statement.
In its view, these ratings agencies "exist to protect and advance the capitalist system and the profits and privileges of the ruling class".
For SFTU the immediate consequences of the latest downgrade will likely be still more job losses, "as international companies and banks respond by withdrawing investments in South Africa and cancelling plans for future investment".
"An economy already imploding is likely to go into free-fall, with catastrophic consequences for the mass of the people," said the union.
It is concerned that one of the consequences of the latest downgrade would be government spending cuts on education healthcare, social security and infrastructure.
The union is of the view that the ratings agencies "hate the political instability (in SA) as they can see that in the short and long run it will not guarantee profits for capital".
"Had they seen greater possibility of profit maximisation, the rating agencies would not have raised a finger in protest against this chaotic political situation," the union claims.
The union calls on the government "to replace neoliberal strategies in the interests of business and follow what the Freedom Charter dictates".
"We are calling for the nationalisation of the commanding heights of the economy, the mines, banks and strategic monopoly industries, under democratic workers’ control and using the countries’ wealth for the benefit of the majority, not the parasitic rich minority in which credit rating agencies are integral and pernicious players," the union's statement concludes.
In the view of The Congress of the People (COPE), "the Ratings Agencies and COPE are both unconvinced of the ability of the ANC to undertake this reformation project" (of the economy).
"It is clearly evident that the state capture project, specifically the damage done to our SOEs and the impact that this has had on our economy and fiscus, and more recently the capture and current repurposing of our National Treasury and the destruction of the integrity and capabilities of SARS, significantly influenced the outlook of the ratings agencies," COPE said in a statement.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
