Reshuffles and downgrades

FORMER Finance Minister Pravin Gordhan’s budget is largely welcomed as sending the right noises to ratings agencies on fiscal consolidation.

A few weeks later, President Jacob Zuma axes Gordhan in a midnight cabinet reshuffle and replaces him with Malusi Gigaba. Rating agencies react swiftly with Standard and Poor’s and Fitch downgrading the country’s sovereign rating to non-investment grade in April.

In October, Gigaba delivers his medium-term budget policy statement. S&P immediately downgrades South Africa’s local sovereign credit ratings to sub-investment grade, Fitch keeps local and foreign currency ratings below sub-investment grade and Moody’s places the currency rating on review, keeping it within the key Citi World Government Bond Index (WGBI).

RMB Morgan Stanley projects a potential $5bn (about R67bn) in outflows should South Africa be excluded from this index. – Kabelo Khumalo

PICTURE: BONGANI SHILULBANE/AFRICAN NEWS AGENCY (ANA) President Jacob Zuma and then Minister of Home Affairs Malusi Gigaba at the Desmond Tutu Refugee Reception Centre launch after complaints from foreign nationals of long queues and alleged corruption in Pretoria.