SA has no choice but to submit to instruments of global capital
measures. Love them or hate them, the rating agencies’ calls have a bearing on the domestic state of affairs. For a nation like ours, that is a great deal. South Africa’s sovereign debt stands at R2.2 trillion. averse to notions such as “radical economic transformation”. It is a loaded idea which may suggest fiscal activism, perhaps without the requisite prudence and discipline.
It may be language palatable to the masses. However, notions of radical transformation attract almost certain reaction such as what S&P’s has just done, rating South Africa’s investment grade as “junk”.
Attempts to sound revolutionary, using populist language, are either untimely or ill-advised. This means that we either commit to adhere to certain economic management imperatives or declare that we are no longer that open market economy we have been purported to be.
Bickering
The jeopardy is doubled when the tampering with sensitive institutions such as the Treasury comes at a time when there is so much political bickering.
Voices that often claimed that the Treasury was not applying enough fiscal activism to accelerate growth, end poverty and promote greater equity, would thinly cover their criticism of the stance former finance minister Pravin Gordhan and Nhlanhla Nene before him, took as they staunchly touted fiscal discipline.
Nothing had masked this proclivity that others have linked to what has now gone down as the notion of “State Capture”. Coupled with several other executive missteps, in spite of the warnings from the rating agencies, it was but just a matter of time that South Africa would be mired in this crisis.
How we are going to recover depends on how quickly we can convince the markets of our commitment to stay the course, on the path of fiscal discipline.
The government assurance of ‘fiscal policy continuity’ is almost hollow at this stage, as it begs the question why Gordhan was removed in the first place.