Cape Town – The African National Congress has expressed concern at the decision of ratings agency Moody’s to downgrade South Africa’s foreign and local currency debt from Baa2 to Baa3.
Among the reasons cited for the decision was the perceived weakening of the country’s institutions, sluggish economic growth, slow implementation of structural reforms, and policy uncertainty, ANC spokesman Zizi Kodwa said on Saturday.
The ANC called on government, the private sector, and organised labour to use this latest downgrade as a catalyst for greater urgency in working to alter the country's economic trajectory and 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," he said.
For its part, the ANC remained committed to transparency and inclusivity in the process of assessing and, if necessary, reviewing policy towards the organisation’s 4th national policy conference and 54th national conference scheduled for June and December 2017 respectively.
"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," Kodwa said.
On Friday, Moody’s Investors Service downgraded South Africa’s rating to Baa3 and assigned a negative outlook. Moody’s also downgraded the government’s senior unsecured short-term program rating to (P)P-3 from (P)P-2.
The rating actions conclude the review for downgrade that commenced on April 3. Moody’s said that over the medium-term economic and fiscal strength would remain sensitive to investor confidence and uncertainty surrounding political developments, “including prospects for structural reforms intended to raise potential growth and flexibility in fiscal expenditures”.
The Democratic Alliance said Moody’s decision was more bad news and a clear “vote of no confidence” in Finance Minister Malusi 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.
Earlier this year, ratings agencies S&P Global and Fitch both downgraded South Africa to "junk" status.