The City of Joburg is facing an imminent credit rating review by Moody’s Investors Service, and an angry mayor Herman Mashaba has blamed it on President Jacob Zuma’s reckless political decisions.
“The decision to place not only the City of Joburg, but a number of large metros throughout the country, under review is a consequence of the gross disregard exhibited by President Jacob Zuma in instituting an abrupt reshuffle of Cabinet – adversely affecting key government institutions,” Mashaba said yesterday.
He said the fact that Johannesburg faced a potential downgrade through no failure of the city, but due to failures of the national government, undermined the hard work of civil servants within the city and betrayed residents’ trust in government.
His statement came as Johannesburg’s global scale short-term rating, currently at Prime-2 and the long-term rating currently at BAA2 were being reviewed for downgrade by Moody’s.
This comes against the backdrop of this week’s downgrade of South Africa to a junk status by Standard & Poor’s (S&P) .
The agency attributed the country’s sovereign credit rating of BB+ to the ongoing political and institutional uncertainty.
Among areas identified were Zuma’s controversial Cabinet reshuffle in which finance minister Pravin Gordhan and his deputy, Mcebisi Jonas were fired. Yesterday Mashaba lashed out at Zuma for his political recklessness.
“The irresponsible and self-serving Cabinet reshuffle by President Zuma has thrown the economy and our sphere of government into a potentially downward tailspin which will threaten service delivery and job creation in our city. Let us not be fooled, it is our poorest residents who will suffer the most as a result of these developments,” Mashaba said.
He said the city’s downgrade would strangle their efforts to attain their 5% economic growth target needed to stimulate job creation and improve service delivery to residents.
In addition, 34% of of the city’s capital budget is funded through long-term debt and bonds. The mayor expressed concern that this might affect infrastructure development as massive allocations within the city’s capital budget were used to finance its R170 billion infrastructure backlog.
“What is most disappointing is that the president’s latest irresponsible conduct comes after Moody’s upgraded both the global and national scale ratings of the City of Joburg by four notches in March last year,” Mashaba said.