By GRAEME HOSKEN, KATHARINE CHILD and ERNEST MABUZA
International financial rating agency Standard & Poor (S&P) junked South Africa’s economy yesterday.
The shock rating decision coincided with an explosive call by the ANC’s Integrity Commission calling on President Jacob Zuma to resign as both President of South Africa and of the ANC.
S&P had planned to take their decision for South African investment rating in June, but in an emergency meeting at the weekend decided to move it to yesterday.
The costs of interest on government’s debt from April 2015 to March 2016 was R128-billion or 3.2% of Gross Domestic Product (GDP). S&P expects this to rise to 4.2% of the GDP.
The downgrade saw the rand sink to R13.71 – its weakest level since January.
The Integrity Commission, set up in March 2013 to deal with issues related to improper conduct and damage to the party’s image, yesterday hand-delivered a letter to ANC secretary-general Gwede Mantashe calling for Zuma’s axing as president of both South Africa and the ANC.
In a copy of speaking notes, compiled by the commission’s members which are expected to be delivered at a meeting on Sunday, the organisation states: “The country is dying because of the President’s leadership. The ANC is divided and fractured.”
Commission deputy chairwoman Frene Ginwala last night refused to comment on the letter or speaking notes.
“I don’t speak to newspapers.”
S&P said Zuma’s cabinet reshuffle posed a risk to fiscal policy and the downgrade reflected its view that divisions in the ANC led to the reshuffle and put policy continuity at risk.
“This has increased the likelihood that economic growth and fiscal outcomes could suffer.”
S&P reduced SA’s credit rating one notch to BB+ from BBB- yesterday, placing the country’s bonds in “speculative grade”.
The commission’s calls are among a growing number of voices, inside and outside of the ANC, demanding Zuma’s head following his dismissal of former finance minister Pravin Gordhan and deputy Mcebisi Jonas in a cabinet reshuffle.
Gordhan, who has spent months trying to meet with investors to calm markets and avoid junk status, was recalled abruptly last week while meeting investors in London.
Gordhan and Jonas have been replaced by Malusi Gigaba and Sifiso Buthelezi.
In the letter to Mantashe – a vocal critic of Zuma’s latest reshuffle – the commission’s chairman, Andrew Mlangeni, said they were deeply perturbed by the reshuffle without consulting the ANC or alliance, and “the impact that this decision will have on the stability of the South African economy”.
“We do not accept the reasons given for this decision, namely, that Pravin conspired with Western governments to destabilise the government or the economy.”
Mlangeni says while they accepted that Zuma had the constitutional prerogative to constitute his cabinet as he saw fit, “by electing to shuffle the cabinet without consulting the officials of the ANC, the President has disregarded the principle and tradition of collective leadership, both within the ANC and with our alliance partners.
“President Zuma’s conduct has divided the ANC. Public utterances by the SG , the Deputy President and the treasurer-general , distancing them from the President’s conduct, are deeply distressing and unprecedented in the history of our movement.”
He adds that the commission had met with Zuma in December 2016 and asked him to resign as President then, but he refused.
He said the commission was scheduled to meet Zuma on April 9 and would repeat its request for him to resign as President of the Republic and of the ANC.
Forex trader Simon Brown explained that the junk downgrade was of South Africa’s foreign denominated debt and not local debt.
Roughly 80% of government debt is in rands and from local financial institutions.
“It still means big trouble for South Africans, petrol and interest rates likely to rise.”
ANC integrity committee calls for President Zuma to resign
International financial rating agency Standard & Poor (S&P) junked South Africa’s economy yesterday.
The shock rating decision coincided with an explosive call by the ANC’s Integrity Commission calling on President Jacob Zuma to resign as both President of South Africa and of the ANC.
S&P had planned to take their decision for South African investment rating in June, but in an emergency meeting at the weekend decided to move it to yesterday.
The costs of interest on government’s debt from April 2015 to March 2016 was R128-billion or 3.2% of Gross Domestic Product (GDP). S&P expects this to rise to 4.2% of the GDP.
The downgrade saw the rand sink to R13.71 – its weakest level since January.
The Integrity Commission, set up in March 2013 to deal with issues related to improper conduct and damage to the party’s image, yesterday hand-delivered a letter to ANC secretary-general Gwede Mantashe calling for Zuma’s axing as president of both South Africa and the ANC.
In a copy of speaking notes, compiled by the commission’s members which are expected to be delivered at a meeting on Sunday, the organisation states: “The country is dying because of the President’s leadership. The ANC is divided and fractured.”
Commission deputy chairwoman Frene Ginwala last night refused to comment on the letter or speaking notes.
“I don’t speak to newspapers.”
S&P said Zuma’s cabinet reshuffle posed a risk to fiscal policy and the downgrade reflected its view that divisions in the ANC led to the reshuffle and put policy continuity at risk.
“This has increased the likelihood that economic growth and fiscal outcomes could suffer.”
S&P reduced SA’s credit rating one notch to BB+ from BBB- yesterday, placing the country’s bonds in “speculative grade”.
The commission’s calls are among a growing number of voices, inside and outside of the ANC, demanding Zuma’s head following his dismissal of former finance minister Pravin Gordhan and deputy Mcebisi Jonas in a cabinet reshuffle.
Gordhan, who has spent months trying to meet with investors to calm markets and avoid junk status, was recalled abruptly last week while meeting investors in London.
Gordhan and Jonas have been replaced by Malusi Gigaba and Sifiso Buthelezi.
In the letter to Mantashe – a vocal critic of Zuma’s latest reshuffle – the commission’s chairman, Andrew Mlangeni, said they were deeply perturbed by the reshuffle without consulting the ANC or alliance, and “the impact that this decision will have on the stability of the South African economy”.
“We do not accept the reasons given for this decision, namely, that Pravin conspired with Western governments to destabilise the government or the economy.”
Mlangeni says while they accepted that Zuma had the constitutional prerogative to constitute his cabinet as he saw fit, “by electing to shuffle the cabinet without consulting the officials of the ANC, the President has disregarded the principle and tradition of collective leadership, both within the ANC and with our alliance partners.
“President Zuma’s conduct has divided the ANC. Public utterances by the SG , the Deputy President and the treasurer-general , distancing them from the President’s conduct, are deeply distressing and unprecedented in the history of our movement.”
He adds that the commission had met with Zuma in December 2016 and asked him to resign as President then, but he refused.
He said the commission was scheduled to meet Zuma on April 9 and would repeat its request for him to resign as President of the Republic and of the ANC.
Forex trader Simon Brown explained that the junk downgrade was of South Africa’s foreign denominated debt and not local debt.
Roughly 80% of government debt is in rands and from local financial institutions.
“It still means big trouble for South Africans, petrol and interest rates likely to rise.”
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