Ramos on downgrade: This time around it's only a 'maybe'

13 March 2016 - 02:00 By ANN CROTTY

It is not the first time South Africa has been on a ratings watch list, Maria Ramos recalls. But this time the costly ignominy of being downgraded to junk appears inevitable. Ramos, who was extremely close to the process last time (she was appointed director-general of the National Treasury in 1996) will only say "maybe" about our impending junk status.It may not be possible to convince the ratings agencies of the progress made by the Treasury or the economic and political advances made by the government. This despite the heroic budget recently tabled by Finance Minister Pravin Gordhan.Economic growth prospects are the major drawback.Ramos, who was a key member of the Treasury team given the task of reducing the budget deficit from a crippling 5.7% of GDP in the '90s, says this time things are different. "There is a remarkable sense of urgency felt by everybody. South Africans from all walks of life are aware of what will happen if we are downgraded." This may help to ensure that if the "maybe" happens an engaged citizenry will ensure it is a short-lived curse.story_article_left1Getting the deficit from 5.7% to below 3% involved intense work. You have to focus on expenditure, revenue and the efficiency of government borrowing, says Ramos. This was the origin of the medium-term budgetary process and the Public Finance Management Act.There is another difference this time and although she avoids specific mention of it, President Jacob Zuma's decision to fire Nhlanhla Nene as finance minister has helped create a sense of common purpose. In the past few months there's been an outreach to multiple constituencies, especially business, which finally seems to be engaging.Ramos, who did a four-year stint as head of state-owned entity Transnet, has sympathy for business people who are under constant pressure to generate profit. "Now they are asking: 'How do we build a country with a common future?' There is a genuine sense we have to pull together and take responsibility." And it is not just about talking. Three business-government working groups have been set up to address the threat of a ratings downgrade, the need for spending on infrastructure, and job creation.Ramos played a critical role in saving the country from a downgrade once. She may not be successful this time, but she seems determined to fight.Like it or not, ratings are critical. They set the ceiling for everyone else's borrowings...

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