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Cape Town – South Africa’s leaders appear to have taken ratings agency Standard & Poor’s seriously regarding a lack of political cohesion among the executive branch.
READ: All eyes on GDP and ratings agency Fitch
President Jacob Zuma and the Minister of Finance Pravin Gordhan and their teams spent four hours on Tuesday discussing the economy, government’s communication team GCIS said on Tuesday.
The teams looked at how to take “forward the programme of reigniting growth, following the recent announcements by credit rating agencies”.
“They discussed the global and domestic economic situation and how to strengthen support to state owned companies.”
Seen on the far left of one photo is SA Revenue Services (Sars) commissioner Tom Moyane.
Photo: Elmond Jiyane, GCIS
Photo: Elmond Jiyane, GCIS
Photo: Elmond Jiyane, GCIS
Photo: Elmond Jiyane, GCIS
Ever since Gordhan was parachuted in to Treasury in December, analysts and critics have pointed at Zuma for putting political pressure on Gordhan as the prudent Treasury chief keeps a tight lid on the country’s precarious fiscus. The Presidency has continuously denied such an allegation.
Gordhan was praised this week for the role he played in preventing rating agencies Moody’s and S&P downgrading South African to junk status.
However, S&P warned in its review on Friday that a lack of political cohesion among the executive branch is concerning.
“Political tensions have increased in South Africa since the removal of former Finance Minister Nhlanhla Nene on December 9, 2015; the Constitutional Court ruling against President Jacob Zuma on March 31, 2016; and periodic disputes between key government institutions and within the ruling African National Congress (ANC),” it said.
“We believe that these political factors - if they continue to fester - could weigh more on investor confidence than inconclusive labour or mining sector reform.”
In shooting down claims that Zuma is out to get Gordhan, the Presidency said two weeks ago that it is absurd to say Zuma would be “engaged in a struggle to control a government department that he already controls, and also when he actually controls the whole of government”.
“The primary objective of the president and government is to unite the nation behind the goals of reigniting growth in order to preserve and create jobs during the difficult economic climate.”
Ratings agency Fitch is set to announce its review findings at the end of Wednesday, with many believing they will not downgrade the country to junk status.
"We expect Fitch to affirm the rating at BBB- but change the outlook to negative, bringing them in line with S&P," said RMB analyst John Cairns. "The announcement will be a small negative and will not fully offset the positive news from S&P."
