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Cosatu calls for 'negligent' Zuma's head

Apr 04 2017 16:14
Lizeka Tandwa, News24

Johannesburg - Cosatu has placed the blame for Standard & Poor's downgrade of South Africa’s sovereign rating to junk status on President Jacob Zuma.

During its press briefing to outline the outcome of Monday's Central Executive Committee meeting, Cosatu general secretary Bheki Ntshalintshali said Zuma was responsible and culpable for the downgrade. 

"It is his inattentive and negligent leadership and disruptive actions that have emboldened these agencies to interfere in this country's political affairs."

Cosatu said it would be calling for Zuma's resignation. The trade union federation believes the Gupta family influenced Zuma's late night decision to reshuffle his Cabinet.

It also believed the reasons for S&P's junk status rating centre on political uncertainty, which it views as an "interference in our domestic political affairs which should be beyond their scope of work".

Cosatu president Sdumo Dlamini said he believed S&P was boldly acting out in anger over the Cabinet reshuffle. 

"We do not take their decisions lightly. At the same time, we do feel they have ventured in too deep. They meddle with political battles in the country. When they act in a manner that makes us think that their reaction is political, I believe they have said what they are saying in anger."

Dlamini said the country and its workers should not fear advancing radical transformation because of rating agencies.

"That fear will not take us anywhere as South Africa." 

It however did express concern over the implications of the rating downgrade.

Ntshalintshali said the possibility that government would have to raise taxes to fund its spending is worrying.

"We are worried because the junk status will have inflationary results as it would result in an increase in borrowing costs, not only for government but across the economy.

"Currently South Africa owes more than R2.2trn, which is more than 50.7% of the national income, and pays R160bn per annum in interest, which is very close to what government spends on social grants." 

Treasury issued a statement on the downgrade on Monday night, saying that even though the S&P rating for foreign currency-denominated debt is at sub-investment grade, rand-denominated debt which is the majority (90%) of the debt portfolio remains investment grade.

Moody’s subsequently issued a statement indicating that South Africa has been placed on review for a downgrade, and said it would make its announcement by Friday. 

Read Fin24's top stories trending on Twitter:

cosatu  |  s&p  |  junk status  |  credit downgrade  |  sa economy
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