The downgrading by Fitch‚ of both the foreign and local currencies of South Africa‚ to sub-investment grade on Friday is “devastating“‚ says Banking Association of South Africa MD Cas Coovadia.
“The fact that Fitch has directly attributed its downgrade to the actions of the President demonstrates in no uncertain terms the broad assertion that the Cabinet reshuffle‚ although the prerogative of the President‚ was not in the national interest‚” he said in a statement.
President Jacob Zuma last month instructed the then Minister of Finance‚ Pravin Gordhan‚ and Deputy Minister Mcebisi Jonas to cancel an international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately. Shortly thereafter he reshuffled his Cabinet‚ prompting outrage particularly over his treatment of Gordhan.
The Fitch downgrade follows S& P Global’s decision to “junk” the country on concerns that recent political events‚ including the Cabinet reshuffle‚ would weaken standards of governance and public finances and was likely to result in a change of economic policy direction.
“A presidential prerogative cannot be exercised in a reckless manner‚ with insufficient regard for the consequences of such prerogative‚” Coovadia said.
“SA is now experiencing the dire consequences of the actions that started with the precipitous calling back of the previous minister from a critical roadshow. One has to ask if we would‚ as a nation‚ be in this position if we were not forced to abandon interactions with investors and rating agencies.
“It is critical that government and the ruling party take heed as South Africa continues to slide backwards because of poor leadership and an inability to act in the national interest over what seems to be the interests of the ruling ANC itself.
“This additional downgrade is of greater concern as it includes a downgrade of the Rand‚ after the local-currency rating was also lowered one level to junk. This will have an immediate and severe impact on the currency‚ will seriously impact on our ability to attract foreign investment and will likely trigger a marked steep rise in prices of goods and services across the board.
“South Africa is poorer today‚” the Banking Association of SA stated.
'SA is sliding backwards due to poor leadership' - Banking Association's message to government
The downgrading by Fitch‚ of both the foreign and local currencies of South Africa‚ to sub-investment grade on Friday is “devastating“‚ says Banking Association of South Africa MD Cas Coovadia.
“The fact that Fitch has directly attributed its downgrade to the actions of the President demonstrates in no uncertain terms the broad assertion that the Cabinet reshuffle‚ although the prerogative of the President‚ was not in the national interest‚” he said in a statement.
President Jacob Zuma last month instructed the then Minister of Finance‚ Pravin Gordhan‚ and Deputy Minister Mcebisi Jonas to cancel an international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately. Shortly thereafter he reshuffled his Cabinet‚ prompting outrage particularly over his treatment of Gordhan.
The Fitch downgrade follows S& P Global’s decision to “junk” the country on concerns that recent political events‚ including the Cabinet reshuffle‚ would weaken standards of governance and public finances and was likely to result in a change of economic policy direction.
“A presidential prerogative cannot be exercised in a reckless manner‚ with insufficient regard for the consequences of such prerogative‚” Coovadia said.
“SA is now experiencing the dire consequences of the actions that started with the precipitous calling back of the previous minister from a critical roadshow. One has to ask if we would‚ as a nation‚ be in this position if we were not forced to abandon interactions with investors and rating agencies.
“It is critical that government and the ruling party take heed as South Africa continues to slide backwards because of poor leadership and an inability to act in the national interest over what seems to be the interests of the ruling ANC itself.
“This additional downgrade is of greater concern as it includes a downgrade of the Rand‚ after the local-currency rating was also lowered one level to junk. This will have an immediate and severe impact on the currency‚ will seriously impact on our ability to attract foreign investment and will likely trigger a marked steep rise in prices of goods and services across the board.
“South Africa is poorer today‚” the Banking Association of SA stated.
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