Government must keep its eye on the credit-rating target - Times LIVE
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Government must keep its eye on the credit-rating target

The Times Editorial | 2016-04-07 00:42:57.0

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As forces intent on removing President Jacob Zuma for his failure to uphold the constitution gathered strength yesterday, a chilling warning came from another quarter - Standard & Poor's.

Cutting its growth forecast for South Africa this year to 0.8% - in line with the Reserve Bank - the credit rating agency said pressure on South Africa's sovereign rating came mainly from slow economic expansion.

While some factors beyond our control - a fall in commodity prices, the depreciating rand and the drought - are drags on growth, the agency also flagged low business confidence triggered by Zuma's decision to fire Nhlanhla Nene as finance minister.

S&P associate director Gardner Rusike told Bloomberg that, while last week's Constitutional Court ruling against Zuma was proof of the strength of our institutions, the resulting political tensions risked distracting the government from getting down to kick-starting growth.

Herein lies the rub.

The government has to dramatically speed up implementation of the pro-growth measures outlined in Finance Minister Pravin Gordhan's Budget - while attempting to see off the threatened mass action.

Standard & Poor's decision on SA's rating, due in June, is the most important of those to be made by three rating agencies because it is already "negative" - one level above junk.

The last thing the country needs right now is large-scale political turmoil - and yet the action threatened by opposition forces after ANC MPs beat off an attempt to impeach Zuma on Tuesday risks developing into a full-blown defiance campaign.

It is incumbent on demonstrators and authorities alike to ensure that protests are peaceful. At the same time, the government must keep its eye on the ball and implement Gordhan's promised reforms - starting with an overhaul of cash-guzzling state-owned enterprises.


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