Gordhan 'surprised' by ratings cut

2012-10-15 10:52

Johannesburg - Finance Minister on Monday said Standard & Poor’s decision to cut the sovereign rating came as a “surprise”, especially since strikes in the mining sector were not yet having a major impact on government revenue and spending plans.

Pravin Gordhan also said in an interview with a national radio broadcaster he expected Fitch - the one ratings agency that has not weighed in on South Africa in the past few weeks -  to revisit its outlook at around the start of the new year.

Standard & Poor’s cut South Africa’s credit rating one notch last Friday, saying mining strikes and social tensions could reduce fiscal flexibility and hurt growth.

“It was a surprise,” Gordhan told Talk Radio 702.

Months of often violent wildcat strikes have paralysed production at many mines in the world’s largest producer of platinum, and have spilled over to hurt gold and iron ore.

“There is no evidence that this will throw us off course,” Gordhan said of the strikes. He did, however, acknowledge that more needs to be done to improve the living conditions of mine workers.

Gordhan said he expected a Fitch review to come after the ANC holds a policy meeting from December 16-20 where it will also elect party leaders.

“They will wait for the ANC conference to be completed and then they will make their judgment call,” Gordhan said.

S&P and Moody’s, which downgraded South African bonds a notch in September, both cited a lack of political leadership in the current labour crisis, indicating the ANC is having trouble managing an increasingly complex economy.

But analysts feel Fitch might be pressured to move before the conference, at which President Jacob Zuma is seeking re-election as party leader, an eventuality that set him up to remain state president until 2019.

“Given the moves by the other rating agencies, we would not be surprised if Fitch also decided to move in the next few months,” Absa Capital said in a note.

Strikes in the platinum and gold industry are rumbling on, week with fresh bouts of violence at the weekend leading to the arrest more than 70 miners at a Gold Fields [JSE:GFI] mine and four others at an Anglo Platinum [JSE:AMS] mine.

At Kumba Iron Ore [JSE:KIO], striking mine workers who seized R3.3bn of equipment have ignored company pleas to end their protest for higher wages. The company has threatened to have them arrested.

Truck drivers signed a wage deal last week for hefty raises, ending a three-week strike that squeezed deliveries of fuel, cash and consumer goods.

With all the wage disputes being settled with increases more than double inflation, the South African Reserve Bank last week warned wage growth could pose a risk to the inflation outlook.

Deputy Governor Daniel Mminele indicated that the central bank’s growth forecasts of 2.6% for 2012 and 3.4% for 2013 will “need to be revisited”.

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  • thasmeel.singh - 2012-10-15 11:04

    what a moron!

      koos.meyer.52 - 2012-10-15 13:20

      This current ANC leadersgip is an absolute disaster in every repect - Education, health, the ecomomy and on and on and on, and yet zuma and his cronies look to be rewarded with another 5 years!!! WTF...

      raath - 2012-10-17 10:28

      Shows you exactly how much he knows (or rather doesn't know) about economics.

  • chris.debeer.14 - 2012-10-15 11:26

    Surprised ! And you are the minister of finance..........right ? I am concerned regarding your ability as an finance minister for this country if you were unable to see this coming...

  • sean.tearnan - 2012-10-15 11:29

    Not suprised by the Ostriches comment

  • mark.haupt.31 - 2012-10-15 11:30

    My Dear Pravin, this just shows that there are others - seemingly smarter than yourself - who look at future scenarios, as opposed to the ANC and their extremely short-sighted views on virtually everything.

  • larry.piggott1 - 2012-10-15 11:44

    Its a surprise to him, when everyone else is surprised it did not happen earlier. Problem is, he is one of the Brighter ones.

  • ryan.a.smith.3958 - 2012-10-15 11:47

    gosh Pravin, these ratings agencies dont wait for confirmation of a "major impact". its called forecasts !!!! seriously, and youre finance minister ??? ok I will be nice, at least you are one of the better fools in the ANC

  • gavin.simpson.0 - 2012-10-15 12:01

    what suprises me is how i then seem to be more aware of what's happening than him.

  • afrikeni - 2012-10-15 12:13

    Communism (which ANC reluctantly follows) works in abundancy, now that there is a shortfall & budget is tight - what are you going to hand out to the masses that are used to & still being promised some free stuff? Everyone see the disaster awaiting us, and you can't, what a surprise!! ANC & the minister wants to sell Mangaung (which status quo is most likeely to be maintained) as a sign of stabilisation. Newsflash, everyone else sees that as part 2 of this incompetent leadership to mess up some more!

      pearson.botha - 2012-10-16 20:11

      Communism does NOT work in abundancy. It does not work. Full stop.

  • sisie.indola - 2012-10-15 12:13

    Oh Mr Gordon - you are really naive if you think all the strikes would have no impact on the economy. It is time to take the blinkers off.

  • cliff.slabbert - 2012-10-15 12:42

    Surprised?????? What planet are you from Gordhan???? You're not out of touch you are comatose!

  • Eterni80 - 2012-10-15 12:45

    He's so busy travelling the world on our dime that he doesn't even know what's happening to SA. Yet another ANC stooge.

  • J.Stephen.Whiteley - 2012-10-15 12:54

    This is sheer dishonesty. The GDP forecast of the Reserve Bank is down 25%. When will we hear someone in government say, ja kerels, we blew it.

  • maureen.churchill.9 - 2012-10-15 13:47

    Well I'm no Mr Gordhan, and I'M certainly not surprised. Here lies the problem, you see yourselves as doing a good job in South Africa, but the big wide world sees you all as incompetent. So wake up your coffee is cold

  • ken.grimblegrumble - 2012-10-15 14:00

    Gordhan When you woke this morning and saw the sun rise, were you also surprised?

      afrikeni - 2012-10-15 14:15


  • lex.holmes2 - 2012-10-15 14:01

    No one outside of the ANC is in the least surprised.

  • denise.moolmanburnett - 2012-10-15 14:23

    All I can is "Shame on you" for being so ignorant..........our minister of finance WOWWWWWWWWWWWWWWWWWWWWWWWWWWWW

  • hedzer.stelma - 2012-10-16 03:09

    Left right and center we have strikes-- to you want to invest in that country -- the answer would be a big no.

  • neal.vantonder - 2012-10-16 12:11

    Oh please Mr Gordon! Quite obviously you should have stayed with SARS! Apparently collecting money from taxpayers is far easier than managing it to run a country. You are not fit to even stand in the shade of Trevor.

  • warren.beard.908 - 2012-10-16 16:16

    Maybe he should have stuck to pharmacy.

  • clive.kihn - 2012-10-17 08:06

    Surprised? Where has this guy been? After the other two ratings agencies had downgraded us, and given the labour anarchy we are experiencing, every economist in the country expected Fitch to do likewise. My opinion of Gordhan has also been downgraded - by rather more than one notch.

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