Five steps required to restore South Africa's "A"-grade sovereign credit rating 

Last week's downgrading of South Africa's sovereign credit rating by Moody's Investors Service means that we have lost our "A"-grade status, since all three major ratings agencies now rate us as BBB+. What we need now are a set of interventions by National Treasury to restore confidence in our economy and work towards a ratings upgrade.

I have written to the Chair of the Standing Committee on Finance to request a parliamentary inquiry into the impact of the decline in our credit rating on ordinary South Africans. Parliament needs to hold government to account for this downgrade, work out what has led to the decline, and press the State to table urgent plans to prevent any further credit rating downgrades.

The DA calls on the Finance Minister to take the following steps to start to turn around the decline in our credit rating:

1. Use the Medium Term Budget Policy Statement to announce a set of reforms to boost growth in South Africa by increasing participation in the economy, in line with the DA's Plan for Growth and Jobs;

2. Hold the line on increases in government debt by cutting wasteful government expenditure and working to link public servant pay to productivity;

3. Increase public infrastructure investment to 10% of GDP from current levels of 6-8% of GDP;

4. Reform our labour laws to (a) give smaller unions a voice (b) end the automatic extension of wage settlements to non-parties (c) increase labour market flexibility and link pay to productivity, and (d) immediately implement the Youth Wage Subsidy; and

5. Formally commit South Africa to the market-orientated polices of the National Development Plan by tabling departmental budgets that reflect that plans commitment to counter-cyclical fiscal policy and limited state intervention.

The DA maintains that these measures would help to stem the decline in South Africa's credit ratings and outlook and send the signal that government is serious about committing to sound economic policies.

Statement issued by Tim Harris MP, DA Shadow Minister of Finance, September 30 2012

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