File image
Pretoria - Finance Minister Malusi Gigaba on Monday postponed a much anticipated media briefing, opting for a meeting with the governing African National Congress (ANC) top brass, this in the wake of a downgrade of South Africa’s credit rating by Moody's. 

"Please note that the Minister of Finance Malusi Gigaba's scheduled briefing to talk about the way forward for the South African economy has been postponed to later in the week," said a statement released by the National Treasury. "This is due to the minister now having to attend a meeting with the ANC leadership on Monday. 

He will then meet with the economic cluster on Tuesday with the objective of developing a comprehensive response programme to the economic challenges." Gigaba had initially been set to hold a media briefing to "talk about the way forward for the South African economy".

A statement preceeding the briefing stated: "Cabinet this week endorsed a full media briefing by the Minister of Finance to share with South Africans the interventions that government will embark upon to address the challenges facing the economy. Interventions will, however, be made within the current budget framework."

After the postponement of the briefing, Treasury said details of the "new media briefing" would be communicated. On Friday, Moody's Investors Services' downgraded South Africa's foreign and local currency debt from Baa2 to Baa3 with a negative outlook. Moody's downgrading of South Africa followed similar actions by S&P Global and Fitch earlier this year. 

At the time, Moody's placed South Africa on review for downgrading. Moody's said there was evidence of systemic erosion of the independence of key South African institutions such as the judiciary, the SA Reserve Bank, and National Treasury. Moody's had cited the abrupt cabinet reshuffle in March as illustrating a gradual erosion of institutional strength. 

The institutional framework had become less transparent, effective, and predictable. Policymakers' commitment to previously articulated reform objectives was also less certain, Moody's added. Moody's had stated that underlying political dynamics which triggered the cabinet reshuffle at midnight on March 31 posed a threat to short and medium-term growth. On Saturday, the ANC expressed concern at the decision to downgrade. 

The ANC called on government, the private sector, and organised labour to use the latest downgrade as a catalyst for greater urgency in working to alter the country's economic trajectory and to boost confidence in the economy. "In particular, we call on the social partners to work together to expand private sector investment in the local economy, continue to maintain the stable labour relations environment, remain focused on government's program of fiscal consolidation, and strengthen governance in the state-owned companies and state institutions in general," ANC spokesman Zizi Kodwa said.

"We have confidence that where any uncertainty or ambiguities still remain in terms of the ANC's policy framework these will be settled decisively by these important gatherings of our people. We are confident also that the outcomes of these gatherings will result in an improved investment climate and should trigger a positive review in the coming months." 

On Friday, the Democratic Alliance said the Moody's decision was more bad news and a clear "vote of no confidence" in Gigaba and President Jacob Zuma. "The decision by Moody's highlights the fact that 'political developments' have had a negative effect on 'institutional strength' which 'casts doubt over the strength of and sustainability of the recovery in growth and stabilisation of the debt-to-GDP ratio over the near term'," DA spokesman David Maynier said. 

Last week, the Federation of Unions of South Africa (Fedusa) added its name to those calling for President Jacob Zuma's resignation due to the economic turbulence linked to the cabinet reshuffle in which the then finance minister Pravin Gordhan was fired from Cabinet. 

"Moody's has cited the weakening of South Africa's institutional framework; reduced growth prospects reflecting policy uncertainty and slower progress with structural reforms; and the continued erosion of fiscal strength due to rising public debt and contingent liabilities as the principal triggers of the downgrade to Baa3 from Baa2," the trade union federation's acting general secretary Riefdah Ajam said.