Fitch downgrade shows reshuffle was ‘not in national interest’, says expert

The downgrading by Fitch, of both the foreign and local currencies of SA to sub-investment grade, is devastating but not unexpected, Banking Association of SA managing director Cas Coovadia says.

“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.

He noted that presidential prerogative could not be exercised in a reckless manner, with insufficient regard for the consequences of such prerogative.

“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.”

Coovadia said it was critical that government and the ruling party took heed as South Africa continued “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”.

He explained the downgrade by Fitch Ratings was of greater concern as it included 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,” Coovadia said.

“South Africa is poorer today.”

Meanwhile, National Treasury reacted to the statement, saying although it was a setback “government remains committed to making sure that it works with business, labour and the civil society continues to improve the business confidence and implement structural reforms to accelerate inclusive economic growth”.

The Treasury added that government wished to reaffirm its full commitment to the policy stance contained in the President’s State of the Nation address and the budget 2017.

//

For more news your way, follow The Citizen on Facebook and Twitter.