SA should not be sucked into meekly accepting an impending downgrade
23 March 2016
Wiseman Khuzwayo wrote in today’s Business Report that, “Political uncertainty has contributed to a slide in the rand this year and could unnerve ratings agencies as they consider whether to downgrade South Africa to “junk” status, a move which would significantly raise the cost of borrowing”.
COPE recognises that a downgrade will entail a higher cost of living, more joblessness, greater poverty and heightened inequality. We must not succumb to any lies that a downgrade is something we can easily live with.
Capital is already fleeing South Africa. People are taking their money out. The demand for SA bonds has suddenly begun to plummet. Pravin Gordhan has warned South Africa that a ratings downgrade to junk status will mean five or more years in purgatory before we climb back again to normality.
If business sentiment continues to decline because of political uncertainty and Zuma remaining in office, our economy will continue to slide. One man in the highest office in the land will cause millions to experience misery. Certainly, it is ANC politics that is making investment in South Africa so risky. During the apartheid era, South Africa was a polecat. Under President Mandela our country was the wonder of the world. Under Mr Zuma the country is once again under a cloud. It is being perceived very negatively abroad.
Russia and Brazil have already been downgraded to junk status and everyone can see the economic turmoil that these countries are already experiencing. South Africa should certainly not seek to join the Brazil-Russia junk status club.
No South African should therefore be persuaded to accept that a down grade to junk status is not the end of the world. For many South Africans it will indeed feel like the end of the world. The social upheaval that will follow will plunge the South African economy into further chaos.
Perception in politics is everything.
It is absolutely essential for South Africa to be perceived as a stable country where rule of law applies and political certainty prevails. ANC bigwigs should stop temporizing and should take decisive action to stop the rot emanating from the office of Mr Zuma.
COPE believes that all parties in parliament should collectively move a motion of confidence in the Minister and Deputy Minister of Finance and strengthen their position in regards to the fiscal framework. We need to take our destiny in our own hands. We must show to the country and to the world that we are behind the Minister and Deputy Minister and that we support the fiscal measures they seek to keep in place.
Issued by Dennis Bloem, COPE spokesperson, 23 March 2016
