Fitch’s downgrade of South Africa is a vote of no confidence in Finance Minister Malusi Gigaba’s ability to hold the fiscal line and stabilise debt‚ the Democratic Alliance says.
DA finance spokesman David Maynier said Gigaba’s attempts to restore confidence and engage ratings agencies had failed to convince Fitch not to downgrade the country’s credit rating to junk status.
“This should come as no surprise given that the minister is trying to convince the ratings agencies that he can hold the fiscal line and implement ‘radical economic transformation’‚ which is simply not credible.
“It’s not good enough for the minister to simply concede the ratings downgrade was a ‘setback’. The minister needs to roll up his sleeves and get into the fight to avoid further ratings downgrades‚” Maynier said.
He said the minister’s number one priority should be to avoid the nightmare scenario where massive forced selling of the country’s debt triggered an economic meltdown that would spare nobody‚ rich or poor.
This could happen if Standard & Poors and Moody’s downgrade SA’s long-term local currency debt‚ which made up about 90% of the country’s debt‚ to “junk status”.
“However‚ the problem is that the ratings agencies do not trust the minister: they regarded him as a presidential minion‚ ready to carry out any instruction‚ no matter how damaging to the economy.
“To re-establish trust‚ the minister will have to show‚ rather than tell‚ ratings agencies that he is serious about avoiding further downgrades‚ by delivering ‘quick wins’‚ starting with saying ‘no’ to bailouts for ‘zombie’ state-owned entities‚ like the SABC‚” Maynier added.