The decision by credit ratings agency Moody’s Investment Service to downgrade SA’s rating outlook from ‘stable’ to ‘negative’ shows that finance minister Tito Mboweni’s midterm budget did not go nearly far enough in getting debt under control and reining in the budget deficit, the DA says.
It is also another stark warning on the dangers that lie ahead if the country does not institute urgent reforms, the party’s spokesperson on finance, Geordin Hill-Lewis, said in a statement on Saturday.
He added that higher borrowing costs make it harder to invest, slowing down economic growth even more.
“This is a lethal combination for employment,” Hill-Lewis said.
Friday’s decision by Moody’s, he said, made reference to low economic growth, widening budget deficits and rising debt levels as the triple headwinds that would sink the country’s credit rating. This was precisely why the DA, in its pre-MTBPS proposals presented on Monday, emphasised that government could not afford to continue putting off difficult decisions needed to turn around the economy.
“SA is paying a heavy price for the policy paralysis in government. The more the government dithers and procrastinates, the more this crisis will worsen. What is needed now, as explained in the DA’s MTBPS proposals, are bold and concrete steps that will rein in the public sector wage bill, address Eskom dysfunction and stop government profligacy,” Hill-Lewis said.
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