Don’t panic‚ says Gigaba of ratings downgrade

“Now is not the time for despondency‚” says Finance Minister Malusi Gigaba‚ who said South Africans should trust our institutions following a credit ratings downgrade on Monday night.

Finance Minister Malusi Gigaba talks to the media at The National Treasury offices in Pretoria. Picture: Alaister Russell/The Times

Gigaba said while he was not downplaying the significance of the decision by rating agency Standards and Poor’s Global‚ “one also wants to say we need to retain our confidence levels in the South African economy‚ our institutions are strong‚ the micro economic fundamentals are also strong‚ the concerns are about political risks‚ policy uncertainties.”

“Those are going to be managed‚” he said.

The minister said while it would not be easy to change the rating‚ the political and economic risks highlighted by the rating agency could be managed.

“We acknowledge that the announcement yesterday was a set back. Despite our current challenges‚ now is not the time for despondency…we will act decisively as government in collaboration with our economic and social partners‚” he said.

On Monday S& P‚ one of the three major credit ratings agencies‚ announced that South Africa’s put revised South Africa’s long-term credit rating from BBB- to BB+‚ dropping the country from investment grade to junk status.

Gigaba said government would do its best to respond to the challenges SA finds itself in‚ saying there was no need for South Africans to feel that there were alternatives.

He said the nation must “not to lock ourselves into a situation where we consider that there is no way out‚ that there are no alternatives for us because there certainly are alternatives for us”.

Gigaba said when SA and the rest of the world faced a recession in 2008‚ government embarked on a massive infrastructure development programme to counter the economic meltdown.

“So we have taken decisions‚ we will continue to take assessment of the strength of our economy and take decisions that will eventually lead us out of the current situation in which we are…I do not think we need to be despondent‚” he said.

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