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Zuma's 'damaging' Cabinet move to blame for downgrade - mines body

Apr 04 2017 09:47

Cape Town - The Chamber of Mines has placed the blame for South Africa's downgrade to junk status firmly at the door of President Jacob Zuma, and called for him to be held to account by the ANC and the people of South Africa.

"Given that, in exercising his prerogative to appoint the country’s Cabinet, the state president must place the national interest first, the chamber believes that the ANC and the people of South Africa should hold President Zuma to account," it said in a statement on Tuesday.

The downgrading of South Africa’s sovereign debt rating to junk status by Standard & Poor's, said the chamber, was the result of Zuma's "irrational and unexplained" decision to reshuffle the Cabinet.

"The firing of a competent, dedicated and globally well respected Finance Minister, Mr Gordhan, and other Cabinet changes, have materially negatively impacted the key institution of Treasury and ultimately the creditworthiness of South Africa’s government.

"The result is significantly detrimental for the entire country. The downgrade will raise the cost of capital, increasing government and private borrowing costs, increasing the portion of government revenue that has to be allocated to covering debt service costs - thus crowding out other key government programmes, weakening the currency, raising inflation and, ultimately affecting investment, growth, employment creation."

The chamber added that it is the poor who will be hardest hit by higher inflation, fewer resources available for social grants, low investment, limited growth in employment opportunities and rising poverty levels.

The "significant effort" by business in collaboration with Treasury, other government departments and organised labour over the past 18 months could not avoid this crisis, which was precipitated by the president's illogical and damaging cabinet reshuffle, said the chamber.

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