‘Our politics do not have to ruin our economy’
Gordhan upbeat fighting will not affect policies
POLITICAL noise is not unique to South Africa and should not lead to economic uncertainty, says Finance Minister Pravin Gordhan.
He was reacting to news that South Africa had avoided economic disaster after two credit ratings agencies chose not to downgrade the country to subinvestment grade, or “junk” status.
Fitch Ratings held South Africa’s sovereign credit rating steady on Friday but revised its outlook from stable to negative.
Moody’s Investors Service did not change its Baa2 rating on Friday but released research notes in which it highlighted the strengths and weaknesses of the South African economy. Moody’s also revised its outlook from stable to negative.
Both agencies said they were concerned about political instability and runaway government borrowing relative to GDP growth.
“The infighting within the ANC and government is likely to continue over the next year,” said a note from Fitch. “This will distract policymakers and lead to mixed messages that will undermine the investment climate, thereby constraining GDP growth.”
But Gordhan yesterday said there was no evidence to suggest that political uncertainty would give rise to economic uncertainty.
“If you look at our economic policy between the ANC and the government, nothing’s changed. Ministers and their departments continue to implement those [policies] and, at the same time, we acknowledge we need to take both structural and other WE’RE NOT ALONE: Minister Pravin Gordhan believes political infighting is not unique to South Africa
We think we’re unique, we’re not. There is political noise all over
forms of reforms,” said Gordhan.
He also welcomed the news that South Africa’s credit rating would remain unchanged, and said he was looking forward to the scheduled rating announcement from S&P Global Ratings next week.
“We think we’re unique, but we’re not . . . When you attend Group of 20 or International Monetary Fund and World Bank meetings, they’re different now . . . because the link between politics and economic policy is much closer everywhere in the world,” he said.
Roadshows to Asia, Europe and the US by National Treasury teams after last month’s medium-term budget speech revealed that investors viewed recent political issues as isolated, Gordhan said.
“The feedback is . . . that there is political noise all over,” he said.
Gordhan praised Telkom chairman Jabu Mabuza, who led the business delegation in the team, as well as labour, saying the partnership had produced results.