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