Are we hunky-dory or junky-gory? Let's go with the latter

05 April 2017 - 09:25 By The Times Editorial
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The ratings agencies could be wrong, of course. Everything could be hunky-dory rather than junky-gory. Malusi Gigaba certainly appears to think so.

The new finance minister said yesterday that there was a need to address "perceptions" of political instability and policy uncertainty. President Jacob Zuma thinks so too. He wouldn't even speak about the downgrade yesterday, denialism having served him so well for so long. Have that head-in-the-sand attitude if you wish. Just don't complain when the following happens:

The rand will weaken (it has already lost 10% of its value since Pravin Gordhan was fired as finance minister less than a week ago). Because we import most of our oil, petrol will become more expensive. Higher transport costs will accelerate food inflation. Interest rates will rise, driving up the cost of credit card debt and the loans you have taken out to buy a house and a car. Eventually, taxes will rise because the government will need more money to repay its own debts. And the amount available for other departments, such as health, education and social development, will be squeezed.

The CEO Initiative, a venture between business, the government and labour set up last year to drive economic confidence and growth, says we can also expect "decimated savings, pensions and investments. Growth and.job creation will be stifled."

All of this explains why Gordhan was in London last week. Believe he was there to plot a coup, if you like; his real purpose was to stop what happened on Tuesday when Standard & Poor's put its metaphorical gun to South Africa's head and pulled the trigger.

Yesterday, a remarkable sentence escaped Gigaba's lips: "We need to reignite the nation's growth engine." This evidence that he lives in a parallel reality tends to confirm the opinion of former DA leader Tony Leon that he will be as successful at the Treasury as he has been in his previous cabinet postings.

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