Image: REUTERS
The downgrade of South Africa’s sovereign credit rating to “junk” status by S&P Global Ratings is a vote of no confidence in the Presidential Fiscal Committee‚ the Democratic Alliance says.
DA spokesman on finance David Maynier said on Saturday that Minister of Finance Malusi Gigaba’s strategy to delay the hard decisions necessary to hold the fiscal line and allow the budget to “blowout” with national debt ballooning to R3.4 trillion‚ or 60% of GDP‚ in 2020/21 had backfired.
The major ratings agencies‚ which used to give the country the benefit of the doubt‚ had finally lost patience‚ he added.
S&P downgraded their sovereign credit rating with a long-term foreign currency rating of “BB”‚ and a long-term local currency rating of “BB+”‚ with a “Stable Outlook” on Friday.
SA however received a reprieve from Moody’s‚ with the agency remaining the most generous of the big three credit rating agencies in being the only one to still rate both foreign- and local-currency South African government bonds as “investment grade”. However‚ it placed the country on review for a downgrade.
“What this means is that S&P have effectively dialled back their ‘ratings clock’ by 23 years and downgraded South Africa’s sovereign credit rating to ‘junk status’.
“The bottom line is that the ratings decisions of the two most important ratings agencies amount to a vote of no confidence in the new and mysterious ‘Presidential Fiscal Committee’s’ capacity to stabilise public finances over the medium term in South Africa‚” Maynier said.