CAPE TOWN South
Africa (Xinhua) -- The downgrade of
South Africa’s credit rating provides a clear signal that the
country is going to have to pull together like never before to
overcome its economic problems, the ruling African National
Congress (ANC) said on Sunday.
A credit rating, being a
measure of how likely the country will be able to repay its
loans in full, is not an unimportant indicator of the state of
the economy, the party said in a statement emailed to Xinhua.
SA’s credit rating were downgraded to junk status by
international rating agencies Standard & Poor’s and Fitch on
April 3 and April 7 respectively.
Both agencies cited political instability as one of the
reasons for the downgrade.
A deterioration in SA’s credit rating will have a major
negative impact on the country’s ability to raise debt funding
to fund its development programs, particularly at a time when
domestic savings are at a low level, the ANC said.
The ANC achieved an investment grade status after it took
over a fully junk status in 1994 when apartheid was brought to
The achievement is seen as one of the greatest successes of
the ANC-led government.
The ANC needs to mobilize collective action by all South
Africans; in the private sector, labour and in government to do
everything necessary to bring the country back to investment
grade, said Enoch Godongwana, Chairperson of the ANC National
Executive Council (NEC) Subcommittee on Economic Transformation.
"The essential messages that were conveyed by the rating
agencies were that we need to deal with the structural
challenges of the South African economy, including dealing with
"Secondly, we need to deal with concerns around contingent
liabilities from SOEs (state-owned enterprises), which threaten
the state balance sheet and by extension the financial stability
of the nation," he said.
The other message from these agencies is that the most recent
reshuffle has sent a signal of political instability and policy
uncertainty, Godongwana said.
The reshuffle, effected by President Jacob Zuma on March 31,
saw 20 ministers and deputy ministers being sacked or replaced,
including Finance Minister Pravin Gordhan.
The move shocked the financial market, sending the rand
plummeting against the dollar by about 10 percent in several
The ANC will convene an economic round-table conference with
all key stakeholders to discuss substantial issues affecting the
economy, particularly aimed at achieving the objective of
lifting investment levels to 30 percent of GDP, according to
But the date for the conference has not been set.
"We need a renewed focus on growth enhancing policies
required to reverse South Africa’s economic fortunes.
"Growth is critical to raising the potential for
socio-economic development within the country," Godongwana said.
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