Ratings concern curious, says ANC
Zuma bobs and weaves through questions
THE ANC has questioned concerns expressed by rating agencies about political uncertainty over the succession battle in the party, saying this was curious and based on unscientific and untested arguments.
But economists warned yesterday that the negative outlook assigned to South Africa by rating agencies Fitch and Moody’s was a warning to the ANC to sort out political tension and problems in the party.
In its review, Fitch revised South Africa’s outlook from stable to negative, while Moody’s retained the country’s negative status.
Iraj Abedian of Pan African Capital said the fact that the rating agencies had given South Africa a negative outlook was another reprieve for the country.
This would provide the ANC an opportunity to fix the areas identified by the rating agencies.
Abedian said the negative outlook was an indication that South Africa was on the precipice of junk status.
“Any more developments on the political front will push us to junk status,” he said.
“This is a warning sign. The ANC has six months to come up with a resolution one way or another,” said Abedian.
ANC spokesman Zizi Kodwa said the fact that the country had not dropped to junk status was an indication of the strong measures put in place to fix the economy by various stakeholders.
He said the government was doing everything possible to get things right.
Kodwa said the party felt the concerns regarding political risk and uncertainty raised by the rating agencies were unfounded.
He said the ANC’s elective conference in December next year, which has been cited as tension-filled, was a feature in ANC spokesman Zizi Kodwa questions the hype around ratings from Moody’s and Fitch. the political calender.
“The ANC finds these concerns very curious given that political contestation of leadership is a regular feature of any democracy,” said Kodwa.
“The conference’s impact on governance and macro-economic performance is an untested and unscientific observation, serving no purpose except to amplify unfortunate and negative narrative distracting from the real constraints to significant and inclusive economic growth.”
He said the rating agencies were conflating issues of the party and the state, and that the latter was committed to fiscal consolidation.
The National Treasury said the reviews by the rating agencies showed that the work by government, labour and business had paid off. It said the economy had shown resilience and was supported by strong independent institutions.
This was reaffirmed by acting government spokesman Donald Liphoko.
He said they had noted the concerns raised by Moody’s and Fitch, and that it was the government’s intention to achieve faster growth.
The Treasury has revised the economic growth to 0.5 percent this year.
Other institutions, including the South African Reserve Bank, the International Monetary Fund and the World Bank, have also revised economic growth to less than 1 percent this year. made a meal of it, he said.
The police and prosecution services can threaten to send the economy down the toilet by attempting to try the minister of finance on trumped-up charges looking suspiciously like a political hit and, in Zuma’s view, this is democracy.
He was equally dismissive of questions about attempts by government ministers to quiz the banks over their decision to ditch his friends the Guptas and his plans regarding former public protector Thuli Madonsela’s report on state capture.
He was still considering Mineral Resources Minister Mosebenzi Zwane’s proposal for a judicial commission of inquiry into the banks, while, on the other hand, he could not “jump” to establish the inquiry called for by Madonsela because her treatment of him had been “unfair”.
The behaviour of the banks smelled of collusion, Zuma argued, offering as evidence the fact that they had all chosen to snub the Guptas in one go.
But Madonsela’s “State of Capture” report, with all its documentary evidence and phone records placing cabinet ministers and Eskom executives in close proximity to the Guptas and the mythical Saxonwold shebeen, needed a redo – and “properly” next time.
While state capture and the ratings story were the juicy bits, Zuma’s most telling response was on the economy and the fact that official unemployment has now climbed to 27 percent.
Was he confident, given the poor performance of the economy on his watch, that the government had workable policies to turn it around, he was asked. Of course he was confident. Yes, there were job losses, but jobs had also been created and besides, all countries were struggling.
Just because things were going badly didn’t mean the government’s policies were wrong, Zuma said.
If this smacked of complacency in the face of catastrophic unemployment – and the results of a survey showing 9 out of 10 South African firms intend cutting costs in the near future (read further job losses) – there was at least an element of truth in it.
Plenty of workable government policies, which might actually make a difference to the economy, are simply snarled up in bureaucracy, political turf wars or disintegrate in the heat of implementation.
Of course, Zuma could not acknowledge another awkward truth – that it is uniquely within his power to lift economic spirits.
His resignation would be the ultimate mood enhancer, but his swagger on Wednesday made it clear this was the last thing on his mind.
Even so, all it would take to reset perceptions of the country, internally and externally, would be for him to call an end to the dirty internal war threatening to unseat Finance Minister Pravin Gordhan, signal his support for efforts to combat graft by signing the Financial Intelligence Centre Amendment bill currently loitering in his in tray and get out of the way of effective reform of state-owned enterprises.
That, within weeks, would transform the economic picture and lift the threat of a ratings downgrade.
What we have instead, apart from the president’s callous unconcern for the impact of his attempts at self preservation on millions of his compatriots, is an arm wrestle over policy that is vital to the country’s economic prospects – energy policy in particular.
So while most experts and the energy minister’s advisory committee believe a combination of renewable energy sources and gas could reduce carbon emissions and meet the demand for electricity, Eskom says this is impossible.
Only because Eskom cannot extend the grid fast enough to keep pace with the rollout of renewables that would be required, which means we need nuclear.
Thus, the policy option that would cost the least, involve the least risk, create the most jobs and inspire greater confidence in the government’s ability to make the right choices is displaced by hidden interests.