Durban - Minister in the Presidency Jeff Radebe has raised fears of a downgrade by rating agencies and urged the state to pull together to prevent this.
Radebe told the media briefing in Parliament yesterday, before his budget vote, that stagnant growth was keeping the country on the edge.
Radebe's fears of a downgrade came as Finance Minister Pravin Gordhan was in Washington meeting rating agencies before the release of their review results in June.
Rating agencies Standard & Poor’s and Fitch are coming to the country next month to conduct their review programme.
This will follow the rating review done by Moody’s last month.
Read also: Gordhan meets ratings agencies
Radebe said South Africa was not out of the woods, and projections by the SA Reserve Bank showed a growth rate of 0.8 percent this year.
This was in line with other projections by the National Treasury, the World Bank and the International Monetary Fund which all revised their growth rate to less than 1%.
Radebe said the situation was not looking promising at this stage.
“We have a toxic combination of very slow growth and high inflation [stagflation] with the latter prompting the Monetary Policy Committee [of the Reserve Bank] to raise interest rates which will put growth recovery under severe pressure.
“There is a danger that our sovereign credit rating will be downgraded by rating agencies.”
He said these were difficult times for South Africa, but all parties needed to pull together to get the country out of trouble.
Read also: S&P cuts SA growth forecast
He said the government’s nine-point plan would reignite growth and the results would start showing in the next two years.
Radebe has become the first minister in the cabinet to openly express fears of a downgrade just two months before the review.
However, Gordhan expressed confidence in Washington this week that things would work out for the country.
He has held meetings with the rating agencies.
The agencies have been worried about economic recovery and political stability.
The judgment of the Constitutional Court and allegations of state capture by the Guptas have been raised by some economists as destabilising factors.
Gordhan raised the issue of stability in February after the Hawks confirmed it was investigating him during his time at Sars when he launched the so-called rogue unit.
He said at the time people who were doing this did not have the interests of the country at heart.
The issue of the investigation by the Hawks has been condemned by the opposition parties, which have questioned the timing.
MERCURY