You made economics political, Mr President

SOMEONE should correct the president. Ratings and South Africa’s battle to avoid sliding into junk status became politicised the moment he fired his finance minister without warning in December 2015.

Until that moment, the country’s history of prudent fiscal management — more prudent than that of our emerging-market peers — had bought it some favour in capital markets.

Ever since those four days in December, when the country’s sovereignty was placed in the hands of strangers to the electorate, political risk has moved front and centre on any short-, medium- or long-term decision on the country.

And this isn’t just a comment on international and domestic investors or “white capital”; it speaks to concerns of South Africans across the spectrum.

South Africa’s political risk is expected to only heighten in the run-up to the election of the ANC’s next leader in December next year.

And it featured prominently in Fitch Ratings’ decision to revise South Africa’s outlook to “negative” on Friday.

So it was quite the performance in parliament this week by President Jacob Zuma when he dismissed concerns about a ratings downgrade and harangued the opposition for politicising the matter.

His argument, in summary, was that there are other nations in the world, namely Brazil and Turkey, that have slipped into the sub-investment grade category and the earth hasn’t stopped moving.

To the president — and this I deduce from his performance — a slide into junk wouldn’t affect the cost of bread for the vast majority of South Africans, so why the fuss? How wrong he is there. Brazil’s descent to junk status has come with its deepest recession in close to 100 years and an ever-evolving political crisis. The Brazilian real has weakened against the US dollar, resulting in inflation rates far above the country’s target.

After a failed coup attempt in July, Turkey’s slide into junk has made it all the more difficult for the country to attract the foreign capital needed to cover its current-account deficit, the fourth largest in the G20 group of major economies, according to Bloomberg.

Zuma’s comments confirm just how out of touch he is. How oblivious to the impact of his political machinations, of which I expect more in the weeks and months to come.

It seems he has taken his cue from Turkey’s President Recep Tayyip Erdogan, who accused ratings agencies of making decisions based on politics rather than economic fundamentals.

If South Africa avoids the fate of Turkey over the coming months, it won’t have anything to do with the first citizen.

And if we fall into that hole, there’ll be only one person to blame: the president — and, by extension, the ANC.

Former Reserve Bank

To him, “junk” wouldn’t affect the cost of bread for most South Africans

governor Gill Marcus was quite peeved about a decision by research analysts from Morgan Stanley to place South Africa in a basket of nations called the “Fragile Five” some three years ago.

South Africa belonged in this grouping, which also included nations Turkey, Brazil and India, because it was considered too dependent on unreliable foreign investment to finance its growth ambitions.

While the IMF has recently said South Africa no longer belongs among the “fragile” few, one can’t help but feel that it’s a deserved tag as long as there’s a leadership deficit.

The bad politics that centre on the interests of the president have jumped ahead of economic fundamentals in determining the South African case.