JOHANNESBURG – The African National Congress (ANC) has responded to the downgrade of credit rating agency Moody’s of South Africa’s foreign and local currency debt, stating that it noted it “with concern’.
On Friday Moody’s announced it had downgraded South Africa's credit rating one notch to BAA3 but kept it at investment grade with a negative outlook, citing the recent abrupt Cabinet reshuffle and reduced growth prospects for an economy mired in recession.
Moody’s is the only major ratings agency to retain South Africa’s investment grade status after Fitch and S&P Global Ratings downgraded the credit rating of Africa’s most industrialised economy to speculative or “junk status”.
"Recent events, particularly but not exclusively the abrupt March Cabinet reshuffle, illustrate a gradual erosion of institutional strength," Moody's said, referring to the sacking of Finance Minister Pravin Gordhan.
Moody’s said “reduced growth prospects” were another driver behind its decision. South Africa sank into recession for the first time in eight years in the first quarter, led by weakness in consumer sectors such as wholesale, retail trade and accommodation.
On Saturday the ANC issued a statement in which it called upon “government, the private sector and organised labour to use this latest downgrade as a catalyst for greater urgency in working to alter our economic trajectory and boost confidence in our economy.
“In particular, we call on the social partners to work together to expand private sector investment in the local economy, continue to maintain the stable labour relations environment, remain focused on government’s program of fiscal consolidation and strengthen governance in the State Owned Companies and state institutions in general.
It stated that for its part, the ANC remains committed to transparency and inclusivity in the process of assessing and, if necessary, reviewing policy towards the organisation’s national policy conference and national conference scheduled for June and December 2017 respectively.
“We have confidence that where any uncertainty or ambiguities still remain in terms of the ANC’s policy framework, these will be settled decisively by these important gatherings of our people. We are confident also that the outcomes of these gatherings will result in an improved investment climate and should trigger a positive review in the coming months.”