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Investec CEO: 14 months of work to safeguard SA from junk wiped out - as it happened

2017-04-03 18:40

Investec CEO Stephen Koseff says the work of 14 months has now been wiped out, following S&P's downgrade of SA to junk status.


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Last Updated at 11:15
03 Apr 22:34

#JunkStatus: Tough times ahead for South Africans  

The downgrade to junk status will trigger a number of economic setbacks, which will impact the living standards of South Africans, warns the IRR.

03 Apr 22:33

03 Apr 22:33

03 Apr 22:32

03 Apr 22:32

03 Apr 22:29

14 months wiped out - Investec CEO

Investec CEO Stephen Koseff told PowerFM that the work of 14 months has now been wiped out, following S&Ps downgrade to junk status, caused by the reshuffle. The CEO Initiative was formed after engagements with Treasury and labour unions following the market crisis caused by the firing of Nhlanhla Nene as Finance minister. The team, together with government and labour, managed to prevent a ratings downgrade throughout Pravin Gordhan's difficult tenure as Finance minister.

03 Apr 22:27

The ANC Women's League - which is very loyal to President Jacob Zuma - told Power FM that S&P is corrupt and should not be allowed in the country. It also called for the ANC government to persuade its BRICS partners to speedily establish the BRICS rating agency.

PowerFM shared the league's views on twitter on Monday night:

03 Apr 22:17

Although there has been somewhat of a surprise to South Africa's downgrade to junk status on Monday, economist Dawie Roodt is of the view that it should have happened sooner. The ratings agencies gave us a lot of time, and gave us a second chance,” he said. “Ratings agencies gave us ample time to correct things. We did not make the most of the opportunity and now we are paying the price.”

Read the full story below ....

03 Apr 22:16

The DA, IFP and UDM called on President Jacob Zuma to immediately resign, following Standard & Poor’s decision to downgrade South Africa’s sovereign credit rating to sub-investment grade late on Monday.

Read the full story with all political reaction...

03 Apr 22:15
Finance Minister Malusi Gigabe said he phoned all three rating agencies (S&P, Fitch and Moody's) on Friday to persuade them that there would no change to the fiscal or spending framework at Treasury. S&P was not convinced and downgraded SA to junk status on Monday.

03 Apr 22:11

Finance Minister Malusi Gigaba's spokesperson Mayihlome Tshwete reacted to junk status on PowerFM:

The rating agencies did raise concerns with the minister and indicated it could come to this, he said. "We must try give certainty."

03 Apr 22:08

Cosatu blames Zuma for downgrade

According to a series of tweets by Power FM, Cosatu said the following regarding the downgrade:  

- It was saddened that we find ourselves in this situation. We could have worked together, to avoid this.  

- President was careless and reckless, how he managed the #CabinetReshuffle  

- The buck stops with the President. He's let down all the social partners who worked so hard to avoid this.  

- The downgrade will cost us a lot. Already spend R160 billion on debt servicing a year- almost as much as social grants.

03 Apr 21:58

Political analyst Daniel Silke wrote this earlier on Monday:

Newly-appointed Finance Mininster Malusi Gigaba’s statement points to a disregard for what a downgrade will do to the cost of capital and ability to spend on crucial infrastructure and social services, and highlights the spurning of the global financial system prevalent in some ANC quarters.

03 Apr 21:57

Political analyst Daniel Silke: SA walks right into junk status

Regrettable, but entirely predictable, South Africa has walked right into the S&P’s ratings downgrade.

In a swift and stark reaction to Jacob Zuma’s cabinet reshuffle and its underlying motivation, the ratings agency decision now compounds the problems of an already stagnant economy so dependent on both domestic and foreign capital investment.  

Whilst the economic effects will ripple across all sectors in the coming months, there is a more dramatic short-term political effect. The downgrade further damages President Zuma at a time when he faces unprecedented internal pressure from his own party and broader society.

It will be used by his increasingly vocal detractors to hammer home their message for a change of leadership and direction. The downgrade undermines the political spin from the President around ‘radical economic transformation’ and also undermines his own leadership abilities already much maligned.  

There is simply something unpleasant about the term ‘junk’ and whatever the practical consequences, the negative sentiment of the term at a time of great political firmament is likely to have a dramatic and lasting effect.

South Africa therefore now faces a tough choice – it’s recovery can begin immediately – but it won’t happen with current economic policies nor with current political leadership. 

03 Apr 21:49

Is this the beginning of SA's Occupy Movement?

03 Apr 21:37

Statement from CEO Initiative:

Downgrade should serve as call to implement structural and policy reforms necessary to create sustainable and inclusive growth  

South Africa’s growth outlook has been dealt a severe blow following the downgrade of the country’s long-term foreign currency sovereign credit rating to sub-investment grade.

As a result of this downgrade all South Africans will be poorer and in particular it will put increased pressure on the most vulnerable sectors of our society.  

Standard & Poor’s (S&P) decision was based on their opinion that the executive changes initiated by President Zuma “have put at risk fiscal and growth outcomes and that contingent liabilities to the state are rising”.

This is a disappointing outcome as a number of green shoots were appearing in the economy following the tireless efforts over the past year of collaboration between government, labour and business.  

This downgrade could and should have been avoided had the structural reforms necessary to underpin sustained and inclusive economic growth been implemented in the interests of all South Africans.  

The most immediate effect of the downgrade is that the country will have to pay more interest on the money it borrows to deliver essential services such as housing and social welfare. It goes without saying that in a low-growth environment this leaves even less money for pressing national priorities such as education and healthcare.  

Ratings decisions affect everyone in the country. When investors lose faith and trust in our economy, all citizens pay the price for this in the form of higher inflation, higher borrowing costs and decreased buying power as well as large reductions in the values of their savings, pensions and investments.  

Progress towards higher levels of inclusive growth suffers as confidence levels fall and it becomes more expensive to fund investments. Lower growth means businesses will be less likely to expand and take more people into employment.  

The CEO Initiative has always maintained that true, sustainable economic empowerment and transformation will only be achieved through inclusive growth. Populist policies that focus on short-term solutions with no regard for the liabilities that we bestow on future generations will only result in the economy slipping further away from providing opportunities that benefit all that live in the country.  

South Africa can ill afford to have its limited resources – that should be spent on uplifting the poorest and most vulnerable in society – be stripped through self-seeking behaviour in the public and private sectors.  

No good comes from a downgrade. Now that this has happened, what is important is how we react. South Africa needs leadership that is dedicated to the singular task of creating a conducive environment for pursuing policies that support higher levels of inclusive economic growth. Without this our country will not fulfil its democratic potential and all our people will be worse off.  

03 Apr 21:35

Rand roils as S&P downgrades SA

The rand continued to weaken as political uncertainty forced the hand of credit ratings agency, Standard & Poor’s (S&P) Global Ratings, to downgrade South Africa’s long term foreign currency rating from BBB- to BB+.

The local currency rating has moved from BBB to BBB-, where the foreign currency rating previously was. Approximately 10% of South Africa’s debt is raised in foreign currency, with the majority denominated in rand.

Read the full report from the Trading Desk at EasyEquities, Fin24's content partner on equities and market moves.

03 Apr 21:34

Remove Zuma immediately, says OUTA after S&P downgrade

The ANC should take every step possible to ensure President Jacob Zuma is stripped of his role as leader of the country, said OUTA (Organisation Undoing Tax Abuse) in a statement, following S&P Global Ratings decision late on Monday to cut South Africa’s sovereign credit rating to junk status.

“We believe that if the authorities act swiftly, South Africa may be able to have the rest of the ratings agencies to stay their decision for a downgrade, and eventually get S&P to reverse their decision.”

03 Apr 21:31

How #JunkStatus affects your pocket, by Absa

Here are a few scenarios that illustrate what a rise in interest rates might cost you:

03 Apr 21:30

How #JunkStatus affects your pocket, by Absa

Here are a few scenarios that illustrate what a rise in interest rates might cost you:

03 Apr 21:30

How #JunkStatus affects your pocket, by Absa

Here are a few scenarios that illustrate what a rise in interest rates might cost you:

03 Apr 21:30

How #JunkStatus affects your pocket, by Absa

Here are a few scenarios that illustrate what a rise in interest rates might cost you:

03 Apr 21:29

How #JunkStatus affects your pocket, by Absa

Here are a few scenarios that illustrate what a rise in interest rates might cost you:

03 Apr 21:20

South Africa has endured a lot in the last few days, says Carte Blanche's Devi Sankaree Govender:

03 Apr 20:53

This is what SA's sovereign rating and currency ratings now stand:

03 Apr 20:45

Watch: Former president Kgalema Motlanthe speaks out against Zuma

“He doesn’t come across as someone who thinks about what is in the national interests or what is in the organisational interests, but seems to be driven by an agenda based on vested interests,” Motlanthe said. “That’s why to an observer there’s a measure of irrationality to what he does.”

03 Apr 20:42
Watch this insightful Bloomberg quick take on SA’s political woes:

03 Apr 20:33
“It was compiled by someone who doesn’t know anything about economics." - Economist Dawie Roodt's response to Treasury's following statement following the downgrade: "Reducing reliance on foreign savings to fund investment and relying less on debt to finance public expenditure will secure South Africa’s fiscal sovereignty and economic independence."

03 Apr 20:30

Treasury said: While the leadership of the finance portfolio has changed, government’s overall policy orientation remains the same. As indicated by Minister Gigaba on 1 April 2017, “government has been, and will remain, committed to a measured fiscal consolidation that stabilises the rise in public debt”.

03 Apr 20:17

Economist slams Treasury response to downgrade

National Treasury’s response to the rating downgrade to junk status by Standard & Poors has been highly criticised by a economist Dawie Roodt. 

03 Apr 20:08
The rand isn't happy

03 Apr 20:04
The head of the IRR’s Centre for Risk Analysis, Kerwin Lebone: The announcement is a considerable setback particularly after the effort that was made by business, civil society, and some government leaders to prevent precisely this outcome.

03 Apr 20:03

Warning of economic setbacks

The SA Institute of Race Relations (IRR) says the decision this evening by S&P Global Ratings to cut South Africa’s long term foreign currency sovereign credit rating to speculative grade or ‘junk status’ risks triggering a series of economic setbacks that will affect the living standards of all South Africans directly.  

03 Apr 20:02

Not surprised?

S&P Global Ratings downgrade comes as no real surprise, says Nilan Morar.

"What does surprise however is the pace at which S&P has sped up their decision. This is quite obviously in response to the recent cabinet reshuffle as they were initially meant to report on this on 2 June."

He said S&P effectively downgraded SA’s long-term foreign currency sovereign credit rating and there is an important distinction to be made.

"Of our total outstanding government debt, only about 10% is issued in foreign currency, while the rest (90%) is issued in domestic currency and this carries an investment grade rating. Of the 90% that is issued in domestic currency, about 35% is held by foreigners," Nilan explained.

He said ratings play a critical role when it comes to the maturing and subsequent requirement to roll  this debt over, i.e. to extend the maturity of this debt, as it simply just gets more expensive.

"As with any investment, investors require a higher return for higher perceived risk and hence need to be paid for as compensation for the higher assumed risk."

03 Apr 19:58

03 Apr 19:57

03 Apr 19:56
Mmusi Maimane: President Zuma should resign immediately to allow a new administration to stabilise our economy, and to stanch this growing crisis.

03 Apr 19:56

Mmusi Maimane: This evening’s decision by S&P to downgrade South Africa’s sovereign credit rating to junk status is a clear vote of no confidence in President Zuma, and a direct result of his decision to fire Pravin Gordhan and Mcebisi Jonas last week.

03 Apr 19:53

Have a look at this infographic by Isabella Maake from Graphics24

Days that the SA minister of finance occupied the hot seat:

03 Apr 19:49

Zuma hit the final nail into our economic coffin

Zuma must resign in on the back of this downgrade by Standard and Poor’s, said IFP spokesperson on finance, Mkhuleko Hlengwa.

“Mr Zuma has actively pursued a downgrade against all sound advice and warnings; and last week with his rogue cabinet reshuffle he put in the final nail into our economic coffin," he said.

“The so-called reshuffle was nothing but a pure political purge with its sight set on capturing National Treasury to loot the public purse; and the consequences for South Africa is a hard-hitting downgrade to junk status.”

03 Apr 19:45

SA cut to junk first time since 2000 after Zuma purge

South Africa lost its investment-grade credit rating from S&P Global Ratings for the first time in 17 years in response to a cabinet purge by President Jacob Zuma that’s sparked increasing calls for him to resign. The rand weakened.

03 Apr 19:44

Factors leading to SA's downgrade:

Messy political infighting, institutional capacity uncertainty (as last week's cabinet reshuffle showed), lack of sufficient progress on implementing meaningful structural growth reforms and rising contingent liability risk on the state's balance sheet were all contributing factors to Monday night’s decision from Standard & Poor’s to downgrade South Africa’s sovereign credit rating to sub-investment grade, said BNP Paribas economist Jeffrey Schultz in a statement.

Schultz said the move was “in line” with the bank’s expectations. “As we had expected, S&P opted not to wait for its scheduled 2 June review, pulling the trigger earlier on heightened political tensions and increased policy uncertainty in the wake of Friday's cabinet reshuffle.”

Schultz said the rand is likely to come under the most pressure in the wake of this decision.

03 Apr 19:43

03 Apr 19:40

Former finance minister Nhlanhla Nene says he has not doubt that Pravin Gordhan would have saved SA from reaching junk status. 

Do you agree?

03 Apr 19:38

ANC is SA's 'junk status' government - Bantu Holomisa

President Zuma’s cabinet reshuffle has caused “radical economic transformation” of a different kind, said UDM leader Bantu Holomisa.

"Zuma bandies this phrase about, making a sweeping statement, without any clear policy detailing what his radical economic transformation entails. This not only confuses South Africans, but any international would-be investors are surely looking elsewhere to spend their money."

He said the ANC has lost control of Zuma, and by default the country, jeopardising any hope of a prosperous economic future.

"We might as well use the term 'junk status' to describe our government," said Holomisa.

He said the UDM will exert even more pressure to have the Speaker of the National Assembly, Baleka Mbete, accede to a call for a special, and urgent, meeting of the House to discuss a motion of no confidence in in Zuma.

03 Apr 19:30

03 Apr 19:30
The road to getting out of of junk status will be long & arduous, warns political analyst Daniel Silke.

03 Apr 19:25

03 Apr 19:24

03 Apr 19:23

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