Good News as South Africa Dodges S&P Junk Status

South Africa braced itself for the worst, with the Rand weakening against the dollar this morning in anticipation of Standard and Poor’s (S&P’s) rating… BUT junk status has been averted! The global ratings service has instead maintained an investment grade sovereign credit rating, with a negative outlook, for South Africa.

The Democratic Alliance (DA) welcomed the announcement and said it “amounts to a second stay of execution for South Africa”.

However, Standard & Poors once again raised serious concerns about political dynamics stating that “political events have distracted from growth enhancing reforms” in South Africa.

The DA pointed out that all the rating agencies have now raised concerns about political dynamics – “infighting within the ANC”, “ANC factional battles” and “political infighting” – underlining the fact that it’s the politics that is killing the economics in South Africa.

The DA claimed that since even Deputy President Cyril Ramaphosa says “government is at war with itself”, the infighting is clearly a major risk to South Africa’s sovereign credit rating, and it is “now time for the ANC government to get its act together and begin implementing the structural reforms necessary to boost economic growth and create jobs in South Africa”.

In a statement issued by David Maynier, Shadow Minister of Finance, he said: “And, in in the end, contrary to what President Jacob Zuma thinks, it is a “big deal” to avoid “junk status”, and the Minister of Finance, Pravin Gordhan, together with the team at National Treasury, and the South African Reserve Bank, deserve full credit for their hard work avoiding a sovereign credit ratings downgrade of South Africa.”