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Govt not working together to avoid junk status - DA

Mar 15 2016 12:40

Cape Town - Despite Finance Minister Pravin Gordhan's attempts to reassure South Africans that the government is doing all it can to avoid a credit downgrade to junk status, the real problem is that government itself is not working together towards this objective, according to Democratic Alliance (DA) shadow minister of finance David Maynier.

Reporting back on Monday on his recent roadshow to appease overseas financial markets, Gordhan said the international investment community still has "confidence that as a leadership team we have the ability and resources to put our economy on a higher road to growth”.

Maynier commended Gordhan for his "commitment to ensuring government, business and labour (work) together to avoid a ratings downgrade to junk status in South Africa".

However, the crux of the matter is that government itself is not working together towards this goal, said Maynier.
"What we really need is for at least the Minister of Finance, Pravin Gordhan, the Minister of Economic Development, Ebrahim Patel, the Minister of Trade and Industry, Rob Davies, and the Minister of Public Enterprises, Lynne Brown, to demonstrate that they are capable of working together to avoid a ratings downgrade."

According to Maynier, this can be achieved by implementing measures such as boosting economic growth, tightening the fiscal consolidation path and the privatisation, or partial privatisation, of state-owned enterprises.

"However, this is highly unlikely, due to President Jacob Zuma’s government now (being) so divided that it seems incapable of taking the hard decisions and then implementing the hard decisions necessary to avoid a ratings downgrade," said Maynier.

At the press conference, Gordhan said: “The key message is that the world is watching South Africa very carefully."

South Africans must be aware that "we need to provide very concrete evidence over the next few months that we're not just talking”, he said.

This comes as rating agency Moody’s is due to visit South Africa from March 16 to 18 before making a decision on the country's investment status.

Rating agencies Standard & Poor’s and Fitch have South Africa on one notch above junk status on their scales.

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