Durban - The future of the country’s economy and the possibility of further downgrades will be directly impacted by the outcome of the ANC’s elective conference.
This is the view of economists and political analysts who were commenting after the ANC Youth League accused former finance minister Pravin Gordhan of attempting to influence the outcome of the conference by saying the country’s economy would fare better with ANC presidential hopeful Cyril Ramaphosa at the helm.
On Friday, Gordhan had told The Gathering event in Sandton, which is hosted by The Daily Maverick, that the country required a new leadership, and that if Ramaphosa was elected there would be no need to worry about the ratings agencies.
“In my own mind I am very clear that the kind of new deal proposition is something that will give Mr Ramaphosa and the team that he selects the opportunity to implement it.
"And I can guarantee you that if we get that team going
we will have no worries about downgrades. We will see a change in the growth numbers, increasing inclusivity over the next two to three years and a different kind of optimism in the country.”
Gordhan also said the ANC conference was not only critical for the party, but for the country as well.
ANCYL national spokesperson Mlondi Mkhize said: “His confidence in uttering those words could only mean that he is well briefed on the ratings agencies' decisions after the 54th ANC national conference, or he is lobbying the agencies to take a particular position if comrade Ramaphosa is not elected.”
Mkhize added it would be unfortunate if the ratings agencies were communicating their decisions with Gordhan and not with Finance Minister Malusi Gigaba.
He denied there was tension between the ANCYL and Gordhan, saying the league “differs” with what Gordhan says or does.
“For him to make such a statement at such a gathering and so confidently confirms the ANCYL’s long-held view that the ratings agencies have a political agenda too,” Mkhize said.
Gordhan yesterday declined
to comment on the league’s
claims.
S&P Global Ratings on Friday night downgraded South Africa’s long-term local currency rating to BB+, or junk, from BBB- with a stable outlook, while Moody’s has placed the country on review to be downgraded.
The chief economist for the Efficient Group, Dawie Roodt, said he had “very little doubt” that the ratings agencies would react negatively if Nkosazana Dlamini Zuma becomes the next president of the ANC.
But the ratings agencies "would probably act positively if Cyril Ramaphosa is president. He might be able to influence the facts over some time, but definitely not overnight,” Roodt said.
However, he stressed that whoever wins the coveted seat as the president of the ANC would not make an overnight difference to the economy.
“The reality is that the state’s debt is still there, and whether or not there are political agendas is irrelevant,” he pointed out.
He said he did not think the ratings agencies had political agendas, but warned that many investors do listen to the agencies and take them seriously.
“The bottom line is that we need foreign investors in the country, and in order to get that, we will have to play the game.
"Beggars can’t be choosers, and right now we are beggars, so we should all start playing the game,” Roodt said.
Economist Professor Bonke Dumisa said while the rand/dollar exchange remained stable despite the latest drowngrade, the economic situation was likely to change after the ANC leadership election, and the effects of this would be seen only in the new year.
He added that as the conference would be concluded before December 22, it would probably not affect Christmas shopping.
Political analyst Imraan Buccus said the toxicity of national politics was informed by political patronage and had much to do with which faction would have control over the public purse.
“The machinations of international financial institutions are often linked to a devious agenda, but the attack by the ANCYL is more toxic and directly linked to the eventual control of the public purse,” Buccus said.