Ratings agencies should hold off on condemning SA

23 May 2016 - 10:14 By The Times Editorial


An open letter to S&P Global and Fitch, which are in the process of reviewing South Africa's sovereign credit rating, now one notch above sub-investment, or junk, grade: We know emotion plays little part in your processes and that you are expected to deliver an objective assessment to investors of the likelihood of South Africa defaulting on its hundreds of billions of rands of debt.We believe you should follow the example of Moody's Investors Service and maintain your present rating of South Africa's debt, with the option of reviewing it at the end of the year.These are our reasons:• Team SA, led by Pravin Gordhan, is being dogged by powerful supporters of President Jacob Zuma who want to derail the finance minister's commitment to financially prudent, pro-growth policies. By staying your decision until the end of the year you would have leverage to ensure we keep our promises;• You would be giving the programmes outlined by Gordhan in his Budget speech in February, including an overhaul of our inefficient, cash-guzzling state-owned enterprises, time to take effect. The promised revamp of our business-unfriendly minerals legislation should also be completed by then;• A large team of business leaders, led by Telkom chairman Jabu Mabuza, and government and union officials have been making progress with programmes aimed at reigniting investment and growth, including a R1.5-billion entrepreneurship fund to support high-growth small and medium enterprises;• Burgeoning public-private partnerships in electricity generation are also a cause for optimism and provide a template for co-operation in other sectors;• Our intermittent power supply, a major drag on the economy, has been stabilised due to the efforts of Eskom's new management;• It appears that the global commodities rout, brought about by the slowdown in China and the strong dollar, has bottomed out. The rand should strengthen as commodity prices rise, giving a fillip to our economy.

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