The DA says attempts by new Finance Minister, Malusi Gigaba to restore confidence and engage ratings agencies failed to convince Fitch Ratings not to downgrade South Africa.
DA MP, David Maynier, said Saturday that the “fact is that the decision by Fitch to downgrade our long-term foreign currency debt and long-term local currency debt to “BB+”, or “junk status”, with a “stable outlook”, is a vote of no confidence in the minister’s ability to hold the fiscal line and stabilise debt.”
“This should come as no surprise given that the minister is trying to convince the ratings agencies that he can hold the fiscal line and implement “radical economic transformation”, which is simply not credible,” he said.
Maynier said it was not good enough for the minister to simply concede the ratings downgrade was a “setback”. He said Gigaba needs to roll up his sleeves and get into the fight to avoid further ratings downgrades.
“The minister’s number one priority should be to avoid the nightmare scenario where massive forced selling of our debt triggers an economic meltdown that will spare nobody, rich or poor,” Maynier said.
“This could happen if Standard & Poors and Moody’s downgrade our long-term local currency debt, which makes up about 90% of our debt, to “junk status”.
Maynier said to re-establish trust, the minister will have to show, rather than tell, ratings agencies that he is serious about avoiding further downgrades, by delivering “quick wins”, starting with saying “no” to bailouts for “zombie” state-owned entities, like the SABC.
