Johannesburg – The National African Federated Chamber of Commerce and Industry (Nafcoc) said on Tuesday that it was "extremely concerned" by the decision of S&P Global to downgrade South Africa's sovereign credit rating to junk status.
This comes after S&P Global on Monday lowered the country’s long-term foreign currency sovereign credit rating from 'BBB-' to 'BB+', which is one notch below investment grade, or so-called junk status.
Nafcoc said in a statement that the impact of the downgrade would reduce the country's fiscal space and would make debt much more expensive, particularly the debt that is denominated in foreign currency.
"This may mean that the country's ability to scale up investment in infrastructure and service delivery will be impacted negatively. This may in turn undermine the growth and transformation targets of South Africa," Nafcoc said.
"Our view is that it bears no purpose to deliberate on the motive or otherwise of S&P suffice to say that this action was not totally unexpected." Nafcoc said this was a time for South Africa to draw on their resilience and to restore business confidence, pursue policies that would lead to higher growth and increase private sector involvement.
It said this must be done on the back of fiscal policies that have already been initiated, adding that the action by S&P Global should make those charged with governance reflect deeply on the way they conduct themselves and exercise leadership.
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"In this regard Nafcoc will initiate dialogue with the government and other stakeholders to re-energise and sustain Economic Transformation projects.
"We are of the firm view that South Africa's fundamentals are still sound. The recent monetary policy statement has confirmed this fact. The fledgling global economic growth is further cause for optimism. We therefore call on government not to yield into the temptation of reversing some of the transformation initiatives aimed at SMME and black economic empowerment in the light of these ratings challenges."