S. Africa optimistic about retention of credit ratings

Despite concerns over its fiscal targets, South Africa is hoping that it can avert a credit rating downgrade, Deputy Finance Minister Mcebisi Jonas said.

“A lot of work has been done and put into the ratings agencies story and I think that we have a firm proposition”.

The official said he is hopeful of a turnaround of the economy in the year and noted that there is a general consensus across the board to boost the economy.

The credit rating agencies have warned of a possible downgrade by the end of the year because of South Africa’s underperforming economy with over-expenditure and a worrying political situation.

Standard & Poor’s has already landed in South Africa for its review, which will be published before the end of the year.

The credit rating agencies were concerned about the government’s ability to maintain fiscal targets, but the South African Treasury had convinced them that it could maintain caps on spending, said Jonas.

“We need to improve growth, we need to ensure that we stick to the fiscal path that we have taken as a country.”

Jonas emphasized the importance of maintaining the current ratings, as a downgrade will have devastating implications.

The deputy minister also noted that nepotism and corruption are undermining efforts for a credible government.

“Leadership that looks beyond its own narrow confines is needed,” said Jonas, who has been an outspoken critic of government graft. In October, he said: “Corruption is real, it’s palpable, and you can feel it.”

South Africa’s political elite have been involved in a slew of corruption scandals, which have eroded the trust of investors and weighed on Africa’s most industrialized economy.

Last week, President Jacob Zuma survived a parliamentary no-confidence vote over allegations of influence peddling, one of several scandals involving him since taking office in 2009.

 

Xinhua/Zainab