Johannesburg - South Africa will seek to convince Fitch and Standard & Poor's that the country is on the right economic track after fellow ratings agency Moody's decided not to downgrade its own rating, Finance Minister Pravin Gordhan said on Monday.
Southern Africa's biggest economy won some breathing space ahead of interactions with Fitch and S&P in the next couple of weeks after Moody's on Friday said the country was “likely approaching a turning point after several years of falling growth”.
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But Gordhan warned against complacency, saying all groups in South Africa needed to work together to boost sluggish growth.
“We developed a common intent among labour, business and government that we don't want to be downgraded and that we have many positives to say about ourselves,” Gordhan told reporters at a public finance management conference.
One of the world's biggest metals producers, South Africa's economy has been hit by a slide in commodities prices which came on top of wide spread labour strife in the mining industry.
Moody's left its rating of South Africa's debt at Baa2, two levels above sub-investment grade, but assigned a negative outlook, citing risks to implementation of structural and fiscal reforms.
“We did our best as a country and as a government and our social partners and we've got to now build on that... It's the beginning of a new period of working as a team amongst ourselves,” Gordhan said.
Hastily reappointed as finance minister in December after President Jacob Zuma rattled investor confidence by inexplicably replacing his predecessor with a little-known politician, Gordhan warned that a global downturn meant South Africa was on its own in tacking its economic woes.
The Treasury in February forecast tepid growth for Africa's most industrialised economy of just 0.9 percent in 2016 from a previous forecast of 1.7 percent and compared with estimated growth of 1.3 percent in 2015.
The Treasury, however, said it expected to reduce the 2016/17 budget deficit to 3.2 percent of GDP from an estimated 3.9 percent in 2015/16 period by tightening spending in the face of lower revenue.
In the latest sign of an economy under stress, the statistics agency said unemployment rose to 26.7 percent of the labour force in the first quarter of this year, the highest since it started a survey of households in 2008.
“We need to find new and innovative ways to search for new engines of growth, to find new ways of igniting growth and creating the jobs that our people desperately require,” Gordhan said.
The government has publicly cheered the Moody's decision, and cabinet minister Jeff Radebe said on Monday he was confident South Africa would retain its investment grade status with Fitch and S&P.
Gordhan was, however, more cautious.
“We can't be positive. All we can do is work as hard as we can to convince people out there that we are a country that is capable of solving its problems,” he said.
REUTERS