Following latest decision by an American financial services company, Standard & Poor’s (S&P), to downgrade South Africa to Junk status, the women league of the ruling ANC, ANCWL, asks South Africans not to allow corrupt S&P into the country.
Issuing a statement on Tuesday following S&P’s announcement, the ANCWL said it wasn’t surprised by the announcement, rather, it was disappointed at the hastiness in the decision to downgrade SA to junk status.
The group described the ratings as a move against their party leader and against his decision to reshuffle the cabinet which led to the dismissal of the Pravin Gordhan and his deputy, Mcebisi Jonas.
Managing director of S&P, Mr. Konrad Reuss, when speaking to the panel during discussions on the outlook for Africa at the Deloitte Africa 2017 Outlook Conference… allegedly indicated that amongst other factors that will impact on SA institutional assessment by S&P will be (a) Cabinet reshuffle,” said Meokgo Matuba, ANCWL secretary general.
“The corrupt S&P that was fined around R26-billion over the top grades it gave to subprime-mortgage bonds has been earnestly waiting to deliver a junk status to SA if the president reshuffles the Cabinet.”
S&P brought down the long-term foreign currency sovereign credit rating on the Republic of South Africa to ‘BB+’ from ‘BBB-‘ and the long-term local currency rating to ‘BBB-‘ from ‘BBB’.
It also lowered the short-term foreign currency rating to ‘B’ from ‘A-3’ and the short-term local currency rating to ‘A-3’ from ‘A-2’. The outlook on all the long-term ratings is negative.
In addition, S&P lowered the long-term South Africa national scale rating to ‘zaAA-‘ from ‘zaAAA’, and affirmed the short-term national scale rating at ‘zaA-1’.
Explaining its reasons, S&P said the downgrade reflected their view that the divisions in the ANC-led government that have led to changes in the executive leadership, including the finance minister, have put policy continuity at risk.
“This has increased the likelihood that economic growth and fiscal outcomes could suffer. The rating action also reflects our view that contingent liabilities to the state, particularly in the energy sector, are on the rise, and that previous plans to improve the underlying financial position of Eskom may not be implemented in a comprehensive and timely manner.
“In our view, higher risks of budgetary slippage will also put upward pressure on South Africa’s cost of capital, further dampening already-modest growth.” the service company said.
Replying to this, the ANCWl, which has been defending the embattled president Jacob Zuma, said South Africans must not allow themselves to be held at ransom by ratings agencies that are serving a certain political agenda.
“S&P is not an apolitical institution and has interests on who has to be a Cabinet member. The ANCWL reiterates that S&P as an institution undermines the constitutional right of the state president to appoint his Cabinet and make changes when he deems necessary,” the league said.
It also called on the ANC-led government to persuade its Brics partners (Brazil, Russia, India, China and South Africa) to speedily establish the Brics rating agency so the country would not need to rely on the corrupt agencies like Standard and Poor’s.
“Corrupt rating agencies like S&P should not be allowed in the country,” the ANCWL said, reiterating that S&P as an institution undermines the Constitutional right of the State President to appoint his Cabinet and make changes when he deems necessary.