Cape Town - President Jacob Zuma has given his backing to the work done by the Treasury and business in staving off a downgrade from rating agencies this month.
Zuma was in a buoyant mood on Saturday after Standard & Poor’s announced that South Africa’s credit rating was kept at negative.
But economists warned on Saturday of more dangers that lie ahead if the ANC did not sort out its politics and the government fails to fully implement structural reforms in the economy and stabilise the labour market.
Zuma said the work done by the government, business and labour had ensured the country was not downgraded. He called for growth in the economy to enable job creation.
But economists Peter Attard Montalto of Nomura and Dawie Roodt, chief economist at Efficient Group, warned that this was a partial victory for the Treasury.
Roodt said South Africa got a second chance with this latest review by S&P. He called on the government and other role players in the economy and on the political front to make use of this opportunity.
He said a downgrade could still happen until there were changes and he was concerned about issues raised by S&P in its latest assessment.
“For us to grow the economy we need to sort out the politics. We will not get confidence in our economy back if we don’t sort out the politics.”
S&P had also wanted the country to improve efficiency in state-owned enterprises and stability in the labour market, said Roodt.
He warned that the rating agencies would not keep South Africa’s negative outlook for longer than two years with the next review in the next six months.
He wants the government to use the next six months effectively in addressing the issues highlighted by Fitch, Moody’s and S&P to get the country out of financial trouble.
Higher growth was one decisive factor, and the Treasury has projected 1.5 percent growth next year and 2.5 percent in the following year.
Montalto said the credit rating by S&P was a partial victory for the Treasury, and more work needed to be done.
S&P had given South Africa the benefit of the doubt because of the small reforms that had been implemented in the economy.
He said the stabilisation of strikes was one of the factors and the supply of energy was another.
South Africa had also committed itself to fiscal consolidation and cutting R25 billion in expenditure over the next three years.