25 November 2017

South Africa: Rating Downgrade to 'Junk Status' Is a Vote of No Confidence in the Presidential Fiscal Committee

Photo: Nick Roux/Wikimedia
South African rands - bank notes and coins.
press release

Minister of Finance Malusi Gigaba's strategy to delay the hard decisions necessary to hold the fiscal line and allow the budget to "blowout" with national debt ballooning to R3.4 trillion, or 60% of GDP, in 2020/21 has backfired.

The major ratings agencies, which used to give us the benefit of the doubt, have finally lost patience, with:

- Standard & Poor's downgrading their sovereign credit rating with a long-term foreign currency rating of "BB", and a long-term local currency rating of "BB+", with a "Stable Outlook"; and

- Moody's affirming their sovereign credit rating with a long-term foreign currency rating, and long-term local currency rating, of Baa3, with a "Negative Outlook", but triggering a "review for downgrade", which should be completed sometime after Main Budget 2018.

What this means is that Standard & Poor's have effectively dialed back their "ratings clock" by 23 years and downgraded South Africa's sovereign credit rating to "junk status".

The bottom line is that the ratings decisions of the two most important ratings agencies amount to a vote of no confidence in the new and mysterious "Presidential Fiscal Committee's" capacity to stabilise public finances over the medium term in South Africa.

Help Save Mayor Herman Mashaba

The ANC have tabled a Motion of No Confidence in Joburg Mayor Herman Mashaba. We cannot return to the ANC's corrupt system.

I Support Mayor Herman Mashaba

David Maynier MP

DA Shadow Minister of Finance

More on This

Government Notes Fitch's Decision Not to Further Downgrade SA

Government has noted Fitch Ratings' decision not to further downgrade South Africa deeper into junk status. Read more »

Copyright © 2017 Democratic Alliance. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 900 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.