South Africa's Zuma defends cabinet reshuffle, union calls for him to quit
- Author: Carolyn Briggs Apr 05, 2017,
Apr 05, 2017, 10:16
On Monday evening the agency lowered South Africa's long-term foreign currency sovereign credit rating to BB+ from BBB and the long-term local currency rating to BBB- from BBB, placing South Africa's credit outlook at junk status. "Higher risks of budgetary slippage will also put upward pressure on South Africa's cost of capital, further dampening already-modest growth".
The South African Communist Party described Zuma's reshuffle as reckless on Friday.
The firing of a competent, dedicated and globally respected Finance Minister, Pravin Gordhan, as well as other cabinet changes, has materially negatively impacted the key institution of treasury, and ultimately the credit worthiness of South Africa's government.
The rating agency goes on to say that its negative outlook 'reflects S&P's view that political risks will remain elevated this year, and that policy shifts are likely, which could undermine fiscal and economic growth outcomes more than S&P now projects'.
The downgrade is likely to make it more expensive for South Africa to borrow money on the global financial markets, as lending to the country would be viewed by investors as riskier.
After thanking the ex-finance minister for his service, Zuma said the government remained committed to measured fiscal consolidation that stabilises rising public debt.
"A united and stable National Treasury and finance portfolio as a whole is absolutely critical for government and the country", he said.
Investors already demand a bigger premium over Treasuries to hold South African dollar-denominated debt than Russian Federation or Brazil, both junk credits.
"Whilst the public has a democratic right to embark on protest action, government does not support acts of civil disobedience and the actions of a select few to infringe on the constitutional rights of the majority", Liphoko said.
The Democratic Alliance (DA) on Tuesday amended the gathering point and the route for its "March for Change" from Luthuli House to Mary Fitzgerald Square in Johannesburg to ensure the safety of protesters. Gardner is the Primary Credit Analyst on South Africa.
"This substantially raises the risk that Moody's. could similarly downgrade South Africa", Razia Khan, chief economist, Africa at Standard Chartered bank, said.
Gordhan was seen as a bulwark against corruption and as finance minister had blocked some questionable policies by other members of Zuma's government.
"Therefore, as of today, we begin a process of consultations. I envisage that the consultation should be concluded as soon as possible", said Mbete. They will often consult them before weighing up specific companies or industries.
For a vote of no-confidence motion to be successful, it requires 201 of the 400 National Assembly MPs to vote in its favor.
The rally, which saw Water and Sanitation Minister Nomvula Mokonyane address a 300-strong crowd, was reportedly held to rally support for the embattled president, who has faced a barrage of criticism following his announcement of a reshuffle in the early hours of Friday.
The congress has also fired a warning shot to the ANC to think deeply about effecting Zuma's removal through internal mechanisms, in order to save the party.