‘Tensions in ANC will retard growth’
POLITICAL tensions in the ANC will weigh on South Africa’s economic growth, ratings agency Moody’s said yesterday, a week after President Jacob Zuma survived a no-confidence vote in Parliament.
The no-confidence vote showed that support among ANC MPs for Zuma was on the wane, increasing the chances of political turmoil within the party that could play into the race to select his successor at a party conference in December.
With the economy back in recession and questions about the credibility of its institutions intensifying, the risk of South Africa losing its remaining investment-grade credit rating from Moody’s has grown.
“Key constraints to growth are domestic, including political tensions and policy uncertainty,” the ratings agency said in its credit opinion statement on South Africa.
In June, Moody’s cut South Africa’s debt by a single notch after Zuma abruptly fired the widely respected Pravin Gordhan as finance minister.
The country has been dropped from the JP Morgan Emerging Market Bond Index Global following downgrades to “junk” status by Standard & Poor’s (S&P) Global Ratings and Fitch in April.
S&P and Fitch kept their ratings unchanged at BB+ at scheduled debt reviews following the unscheduled downgrades, but both have warned of deeper cuts if policy uncertainty continues to hamper economic reforms.
Moody’s said in the statement that South Africa’s economy would grow 0.5% this year and 1.2% in 2018.
In a no-confidence motion in Zuma held through a secret ballot in Parliament last week, about 30 ANC members broke ranks and sided with opposition parties to remove Zuma.
“The results reflect the rising political tensions within the ruling party in the runup to the leadership conference of the ANC in December,” Moody’s said.
Allegations of corruption against Zuma in the awarding of government contracts at state firms worth billions of rands have also dented investor confidence and raised the threat of downgrades as political infighting distracts from the economy.
The reports, denied by Zuma, are based on leaked emails and have drawn several international firms into a scandal that has widened divisions within the ANC and prompted senior politicians to call for Zuma’s resignation. – Reuters