SA gets a second stay of execution from Standard and Poors

We welcome the decision by Standard and Poors Global Ratings Services (“Standard & Poors”) to maintain an investment grade sovereign credit rating, with a negative outlook, for South Africa.

Today, Standard & Poors affirmed its foreign currency rating at BBB-, but lowered its local currency rating to BBB, which is two notches above “junk status”, while maintaining a negative outlook on South Africa.

The fact that Standard & Poors has not downgraded its sovereign credit rating to “junk status” amounts to a second stay of execution for South Africa.

However, Standard & Poors once again raised serious concerns about political dynamics stating that “political events have distracted from growth enhancing reforms” in South Africa.

All the rating agencies have now raised concerns about political dynamics – “infighting within the ANC”, “ANC factional battles” and “political infighting” – underlining the fact that it’s the politics that is killing the economics in South Africa.

The fact that, as Deputy President Cyril Ramaphosa puts it, “government is at war with itself” is clearly a major risk to our sovereign credit rating, and it is now time for the ANC government to get its act together and begin implementing the structural reforms necessary to boost economic growth and create jobs in South Africa.

And, in in the end, contrary to what President Jacob Zuma thinks, it is a “big deal” to avoid “junk status”, and the Minister of Finance, Pravin Gordhan, together with the team at National Treasury, and the South African Reserve Bank, deserve full credit for their hard work avoiding a sovereign credit ratings downgrade of South Africa.

Statement issued by David Maynier, DA Shadow Minister of Finance, 4 December 2016