Gordhan: urgent shift may save SA
SA has a chance of averting a credit rating downgrade next week when international agencies Moody’s Investors Service and S&P Global Ratings release their ratings of its sovereign debt, says former finance minister Pravin Gordhan.
SA has a chance of averting a credit rating downgrade next week when international agencies Moody’s Investors Service and S&P Global Ratings release their ratings of its sovereign debt, says former finance minister Pravin Gordhan.
SA risks falling further into junk status and being eliminated from leading global bond indices, which some economists believe is a certainty, especially after the resignation of the Treasury’s head of budget, Michael Sachs, and a last-minute push by President Jacob Zuma for free higher education.
Sachs is the third senior official to resign in 2017 after Gordhan was booted out in a cabinet reshuffle in March.
Lungisa Fuzile, who was Treasury director-general, and Andrew Donaldson, the acting head of the state technical advisory centre attached to the Treasury, left several months ago.
Speaking to Business Day TV on Tuesday, Gordhan said: “Whilst we might say there are perceptions of state capture, I want to submit that some of it is very real, some of it might still need to be proven, but there is enough that is real that we should actually be very concerned about.
“If we can work our way out of that cycle and turn ourselves towards a virtuous cycle over the next three months or so then it’s possible in the first instance to avoid the last downgrade – potentially from Moody’s — but secondly create a real round of optimism in the country.”
Much depended on the outcome of the ANC elective conference in December. “If we see a different leadership emerging by the end of December, we might get the break that we require as a country.”
If this were to be followed with “urgent steps to restore confidence”, including firing corrupt officials in state-owned enterprises and ensuring they were prosecuted, “then I think we are sending a signal to the South African people and the ratings agencies that we are back to the serious path we were on”, he said.
Speaking about institutional memory in state entities, Gordhan said “one of the lessons we’ve learnt in a very harsh way at SARS [South African Revenue Service] and elsewhere is that you can’t reproduce those skills overnight, notwithstanding the protestations that we might hear from incumbents”.