Finance Minister Malusi Gigaba on Tuesday said the decision by S&P Global to cut South Africa’s sovereign credit rating to junk status was a setback but there was no need for despondency regarding the matter.
“We acknowledge that yesterday’s announcement was a setback. Despite our current challenges, now is not a time for despondency. We have many strengths that we can leverage to grow our economy inclusively. We will act decisively as government in collaboration with all economic and social partners,” Gigaba said addressing journalists in Pretoria.
Gigaba said he would be leading a South African delegation to engage different ratings agencies on the reasons which have been cited for the downgrade.
“Whatever decision they make, we are intending to go and engage with them because we do need to address the perception about the political stability, the risks and uncertainties they are talking about. The policy uncertainties that they have, and to reassure them that of our intention to stay the course. There has not been a change in governments, there has been a change in the political executive in the department,” said Gigaba.
The minister, flanked by Deputy Finance Minister Sfiso Buthelezi and Director General Lungisa Fuzile said he had concluded a meeting with his predecessor Pravin Gordhan, before addressing media at the National Treasury on Tuesday.
Gigaba said without downplaying the impact of the decision by S&P Global on South Africa, it has to be noted that the economy remains strong.
“We need to retain our confidence levels, the South African economy is strong, our institutions are strong and really the macroeconomic fundamentals are also strong,” he said.
“The concerns are about political risks, policy uncertainties – those are going to be managed. I’m not saying it’s easy to get out of a rating downgrade but I think we can manage the political and policy risks highlighted by S&P and Moody’s. I remain confident. We are going to engage with them, I think there is sufficient goodwill around the country for us to be able to to engage with these different institutions.”
Gigaba said the situation will be sufficiently managed.
“Don’t doubt our capability. Don’t doubt it,” he said.
Gigaba said he was informed of S&P’s decision last week, on his first day as finance minister.
“When I spoke on Saturday, I indicated that I had spoken to Moody’s and Fitch, I did not mention S&P because when I walked into [the] office on Friday, they had made their decision. They had taken their decision. They did afford us the courtesy of informing us,” said Gigaba.
“By Friday, already when I arrived, the decision had been made. We felt that, at that point it was not necessary to talk to them because we were not going to change the decision. But we intend talking to them going forward. There are plans.”
The minister said when he addressed media on Friday and on Saturday, he could not divulge the downgrade earlier.
“The reason I did not take you into my confidence with regards to the S&P decision is because they had also taken me into their confidence. So I could not undermine that courtesy which they accorded me by further divulging the content of what they had told me in confidence,” said Gigaba.
“I think it’s just a matter of principle and integrity when somebody does that. I hope you understand that. It may not be the best outcome but I think it’s something that works.”
Calls for President Jacob Zuma to resign have been mounting since the downgrading of South Africa to junk status by rating agency S&P Global was announced on Monday.
Another rating agency, Moody’s, announced on Tuesday that it has placed the country’s creditworthiness on review.
Zuma fired finance minister Pravin Gordhan and replaced him with Gigaba late on Thursday.