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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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