Gigaba: Don’t underestimate junk status
WHILE some ANC members appeared unperturbed by rating agencies downgrading the country to junk status, Finance Minister Malusi Gigaba has cautioned this must not be taken lightly.
Gigaba was speaking with members of the ANC Youth League in the ethekwini region, who packed the Pinetown Civic Centre yesterday for the policy lecture.
Gigaba’s stance was different to that of ANC Youth League president Collen Maine, who previously dared the rating agencies to downgrade the country, saying South Africa would survive even if downgraded.
Echoing him was Water and Sanitation Minister Nomvula Mokonyane.
But Gigaba, who took over as finance minister in March when President Jacob Zuma reshuffled his cabinet, said the downgrades were not good for the country, particularly the poor.
“We should not take the issue of junk status lightly. Being on junk means a stateowned company like Eskom will struggle to do its work, which will lead to a loss of jobs for people who work there.”
He said it would be difficult for the country to borrow money from the International Monetary Fund and World Bank and the repayment terms would be much higher than for countries not on junk status.
South Africa was downgraded to junk status by Standard & Poor’s and Fitch a week after the cabinet reshuffle in March.
Moody’s, which placed the country two notches above junk, has yet to announce its review.
“Food prices will increase, the cost of living will be expensive and the people who will bear the brunt is you, the poor,” Gigaba told the youth.
He warned that people should tread carefully when talking about junk status because it had the potential to push the inflation up. “We must do everything in our power to restore our investment grade,” he said.
Gigaba reiterated the Ancled government’s commitment to radically transform the economy of the country, saying it was untoward that the economy was still controlled by a few.