ANC salutes efforts to avert junk status

Cape Town - The ANC has thanked the government, CEOs and the labour movement who worked together to help stave off a credit ratings cut by Standard & Poor’s (S&P), however it added that the next few months are crucial turning the economy around.

"The decision is a reward for the collective efforts of all South Africans that did everything to put South Africa first in placing our case before the rating agencies," said Enoch Godongwana, chairperson of ANC NEC Subcommittee on Economic Transformation.

On Friday S&P affirmed South Africa’s long and short term foreign and local currency bond ratings at ‘BBB-/A-3’ and ‘BBB+/A-2’ respectively.

The foreign currency bond rating remains one notch above sub-investment grade whereas the domestic currency bond rating remains three notches above sub- investment grade.

"The President and the Minister of Finance have been working with a number of CEOs and the labour movement in trying to turn the economy around and building confidence on the economy," said Godongwana.

"The ANC salutes the social partners for demonstrating unity of purpose and further urge to continue to work together on matters such as the Mining Charter, the labour reforms in Nedlac etc."

He said this was particularly important given the fact that S&P maintained the negative outlook on the rating, citing concerns about economic growth and warned it could lower the rating by year-end or next year if policy measures do not turn the economy around.

Godongwana said the ANC NEC held on 28th to 30 May adopted a series of resolutions to support growth and supports governments’s fiscal stance focusing on expenditure ceiling, raising tax revues and associated cost containment measures.

"The next six months are critical in demonstrating the will and ability to turn things around."

A downgrade would have come at a huge cost to a country with an already ailing economy. It would have indicated a riskier investment climate and come with dire consequences for borrowing costs, foreign direct investment and employment.

It would also have seen investors flee to other markets in search of higher returns, resulting in a decline in direct investment.