Nedlac sets up task team in response to credit rating downgrades

Nedlac has intervened to find a way to extricate the country out of its current economic morass resulting from junk status downgrades recently issued by S&P Global and Fitch Ratings.

Nedlac, which held its special executive council meeting on Tuesday, resolved to establish a high-level task team that would co-ordinate all-round efforts to respond to the current situation, which will likely place the country on the brink of an economic crisis.

The team, whose composition was not explained, would be briefed by the National Treasury on an ongoing basis, a Nedlac statement said on Tuesday.

The council agreed on the need for a consistent confidence-building message that demonstrates South Africa’s commitment to accelerated inclusive growth.

This sentiment is in line with the statement President Jacob Zuma made at the Chris Hani memorial unveiling that a meeting was held to discuss further the impact of the credit rating downgrades and how government should respond adequately and unite the country.

The president did not elaborate further on this except to say the meeting was attended by new Finance Minister Malusi Gigaba and his deputy Sfiso Buthelezi, among others.

Gigaba and Buthelezi attended the Nedlac meeting for the first in their new capacities.

Gigaba also briefed the meeting on government’s assessment of the sovereign downgrades by the two ratings agencies.

The minister explained the context under which the junk status ratings occurred and also elaborated on the steps government should undertake to avoid a further downgrade and return the country to investment grade.

“The meeting expressed concern about the impact the downgrades would have on the economy in general and the quality of life, especially for the poor and working class, job creation, sustainability of business, including small businesses and the ability of big companies to grow and create jobs, infrastructure projects and social reforms,” said Ronnie Mamoepa, spokesperson for deputy President Cyril Ramaphosa.

The Nedlac partners were confident that they could act together and constructively assist the country to mitigate the impact of the downgrade drawing from their previous experience handling the 2008 global financial crisis.

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