.

     

.


THE MOST FROM THE COAST !

..


 Coastweek website


XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

South African sovereign credit rating downgraded to 'junk' status

CAPE TOWN South Africa (Xinhua) -- Rating agency Standard & Poor’s (S&P) on Monday downgraded South Africa’s sovereign rating to junk status days after President Jacob Zuma sacked Finance Minister Pravin Gordhan.

S&P lowered the long-term foreign currency sovereign credit rating on South Africa to ‘BB+’ from ‘BBB-‘and the long-term local currency rating to ‘BBB-‘ from ‘BBB’.

S&P said in a statement that its decision was based on the cabinet reshuffle effected by Zuma last week.

The reshuffle, which affected 10 ministers and 10 deputy ministers, put South Africa’s fiscal and growth outcomes at risk, the agency said.

"We assess that contingent liabilities to the state are rising," S&P said.

The agency also lowered the short-term foreign currency rating to ‘B’ from ‘A-3’ and the short-term local currency rating to ‘A-3’ from ‘A-2’.

S&P said the outlook on all the country’s long-term ratings is negative.

In addition, S&P lowered the long-term South Africa national scale rating to ‘zaAA-‘ from ‘zaAAA’, and affirmed the short-term national scale rating at ‘zaA-1’.

"The downgrade reflects our view that the divisions in the ANC-led government that have led to changes in the executive leadership, including the finance minister, have put policy continuity at risk.

"This has increased the likelihood that economic growth and fiscal outcomes could suffer.

"The rating action also reflects our view that contingent liabilities to the state, particularly in the energy sector, are on the rise, and that previous plans to improve the underlying financial position of Eskom may not be implemented in a comprehensive and timely manner," the agency said.

It warned that higher risks of budgetary slippage will also put upward pressure on South Africa’s cost of capital, further dampening already-modest growth.

The news plunged the rand immediately to R13.71 against the dollar from R13.40 last Friday.
.

UPDATES:

South Africa’s overall policy orientation remains
unchanged despite downgrade: Treasury

CAPE TOWN South Africa (Xinhua) -- The South African government’s overall policy orientation remains the same despite the downgrade of the country’s sovereign credit, the National Treasury said on Monday.

The government has been, and will remain, committed to a measured fiscal consolidation that stabilizes the rise in public debt, the Treasury said, citing a pledge by Finance Minister Malusi Gigaba.

The Treasury was speaking after international rating agency Standard & Poor’s (S&P) on Monday lowered the long-term foreign currency sovereign credit rating on South Africa to ‘BB+’ from ‘BBB-‘and the long-term local currency rating to ‘BBB-‘ from ‘BBB’.

S&P said in a statement that its decision was based on the cabinet reshuffle effected by President Jacob Zuma last week.

The reshuffle, which saw well-respected former Finance Minister Pravin Gordhan being sacked, put South Africa’s fiscal and growth outcomes at risk, the agency said.

"We assess that contingent liabilities to the state are rising," S&P said.

"The downgrade reflects our view that the divisions in the ANC-led government that have led to changes in the executive leadership, including the finance minister, have put policy continuity at risk.

"This has increased the likelihood that economic growth and fiscal outcomes could suffer.

"The rating action also reflects our view that contingent liabilities to the state, particularly in the energy sector, are on the rise, and that previous plans to improve the underlying financial position of Eskom may not be implemented in a comprehensive and timely manner," the agency said.

It warned that higher risks of budgetary slippage will also put upward pressure on South Africa’s cost of capital, further dampening already-modest growth.

The government noted the sovereign rating announcement by S&P, the National Treasury said in a statement.

While S&P has lowered its rating of foreign currency-denominated debt to a sub-investment grade, rand-denominated debt, which constitutes 90 percent of the debt portfolio, retains its investment-grade rating, the Treasury said.

This rating announcement calls for South Africans to reflect on the need to sustain and act with urgency to accelerate inclusive growth and development so that the country can reverse the triple challenge of poverty, unemployment and inequality, the Treasury said.

It said reducing reliance on foreign savings to fund investment and relying less on debt to finance public expenditure will secure South Africa’s fiscal sovereignty and economic independence.

"Government remains committed to making sure that its work with business, labour and the civil society continues in order to improve the business confidence and implement structural reforms to accelerate inclusive economic growth," said the Treasury.
.

South African parliament speaker to consider requests
for 'no-confidence' motion against President Zuma

CAPE TOWN South Africa (Xinhua) -- South African Parliament Speaker Baleka Mbete said Sunday she will ensure that requests for a no confidence motion against President Jacob Zuma be given appropriate consideration.

Mbete arrived in South Africa on Sunday after cutting short her trip to Bangladesh, citing recent requests for a debate on a no-confidence motion against Zuma as the reason.

On March 30, Mbete’s office received a letter from the opposition Democratic Alliance (DA) requesting for a motion of no confidence in Zuma.

The letter indicated that the motion be scheduled when Parliament reconvenes.

Later on the same day, a similar request was received from the Leader of the Economic Freedom Fighters (EFF) for the National Assembly to be convened for a special sitting to debate and vote on a similar motion.

The opposition has approached the Western Cape High Court to compel Parliament to urgently schedule a motion of no confidence in Zuma, who has been under fire for drastically reshuffling the cabinet in the early hours of Saturday.

The reshuffle, which affected 10 ministers and 10 deputy ministers, including former Finance Minister Pravin Gordhan, has drawn criticism and prompted calls for Zuma to step down.

When a motion of this magnitude is called and is in line with the Parliament’s rules, it must be scheduled and must receive priority, Mbete said in a statement.

"I will, therefore, as of today, begin a process of consultation contemplated in the Rules in the consideration of the requests submitted. I envisage that the consultation should be concluded as soon as possible," said Mbete.

She said that once the consultation process is concluded, her office will duly write to all the parties involved to advise them of the outcome.

For a vote of no-confidence motion to be successful, it requires 201 of the 400 National Assembly MPs to vote in its favor.

If the motion is successful, then the president, his deputy, cabinet ministers and all their deputies must resign as provided for in section 102 of the Constitution.

Zuma has survived at least two no-confidence motions in Parliament, dominated by MPs of the ruling African National Congress.
.

SEE ALSO:

South Africans express mixed views on latest cabinet reshuffle

Remember: you read it first at coastweek.com !


Diamond Trust Bank banner | Coastweek

 

TO ADVERTISE ON THIS WEB SITE:  www.coastweek.com
Please contact

MOMBASA - GULSHAN JIVRAJ, Mobile: 0722 775164,
Tel: 0731 099309 / (+254) (41) 2230130 / Wireless: 020 3549187
e-mail: info@coastweek.com

NAIROBI - ANJUM H. ASODIA, Mobile: 0733 775446 / 0773 468786
e-mail: anjum@asodia.co.ke

 
    © Coastweek Newspapers Limited               Tel: (+254) (41) 2230130  |  Wireless: 020 3549187  |  E-mail: info@coastweek.com