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SA's sovereign credit rating still a priority - Gigaba

Apr 02 2017 10:05
Lameez Omarjee

Johannesburg – New Finance Minister Malusis Gigaba said that government is committed to maintaining an investment grade credit rating.

He was speaking at a press briefing in Pretoria on Saturday. His newly appointed deputy Sfiso Buthelezi as well as Treasury’s Director-General Lungisa Fuzile were at the briefing. Gigaba made assurances of Treasury’s position in engaging with ratings agencies as well as various stakeholders to remain investment grade.

He said it was important to ensure South Africa’s access to investment capital at fair and manageable interest rates.

Gigaba has had discussions with both Moody’s and Fitch. He is to have a discussion with Standard & Poor’s next week.

He said it was necessary to reach out to them, for them to know who he is and to understand how he thinks. “I indicated to them we are open to them, we are accessible to them. Whenever they need to talk us, we are available,” he said.

Gigaba could not divulge further on what was discussed but said that the conversations were “good, cordial but robust”.

Given the wide-spread opinions on ratings agencies, Gigaba said that it was important to cooperate with investors. “We need to address issues of investment capital and concerns among global communities, whether we are able to pay back the investments that various companies and investors make in our economy.”

READ: 'I have no business interests' - Gigaba

He added: “I don’t presume they don’t like us, neither do they presume we don’t like them. But I think they are part of the checks and balances that exist in the global economic system.”

Investors should have opinions about the country, and in turn the country must generate “sufficient confidence” among them that their investments are safe and rational decisions are being taken, Gigaba highlighted.

“We recognize our context as a middle-income country in a globalized world, and we appreciate the need to retain the confidence of international stakeholders and partners,” he said.

ALSO READ: SA has strong case to remain investment grade – Gordhan

Addressing concerns on whether the Cabinet reshuffle might impact the country's sovereign credit rating, former Finance Minister Pravin Gordhan said that the country has a strong case to remain investment grade.

Gordhan was speaking at briefing on Friday following his axing. He said that work to restore confidence in the economy among investors, businesses and rating agencies has not been undone.

He added that there are good things to note in the country to maintain confidence.

David Maynier, Democratic Alliance shadow minister of finance, said in reaction to Gigaba's "maiden press conference" that the new minister's intention to "restore confidence and calm" is likely to have exactly the opposite effect and create even more policy uncertainty when it comes to the economy in South Africa. 

"The minister expressed his commitment to 'radical economic transformation' with almost religious zeal, but then did not seem to be able to explain exactly what it means and conceded that there was still clarification needed on the matter," Maynier said in a statement. 

"This is unlikely to go down well with what the minister calls 'credible ratings agencies' - with one ratings agency already warning that a change in policy may signal a ratings review of South Africa." 

READ: Fitch warns of ratings review on cabinet reshuffle

Fitch had issued a statement warning that the Cabinet reshuffle signals a change in policy direction and it could result in a review of sovereign ratings.

The ratings agency indicated that that a change in policy will raise political tensions within the ANC and its traditional allies, potentially weakening public finances and standards of governance.

In addition, Maynier said the real concern was that the minister was appointed with the "Guptas' stamp of approval". 

"The real test of the new minister will not be his words, but his deeds when it comes to decisions that may have an effect on the Gupta empire's interest in South Africa." 

Maynier cited the approval of the joint venture with VR Laser Asia - a company in which the Gupta family and their affiliates have an interest - as well as the coal contracts between Eskom and Tegeta Exploration, and control over the Habib overseas bank. 

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