Gigaba to brief media after ratings downgrade
TMG Digital | 2017-04-04 07:22:44.0
Newly appointed Finance Minister Malusi Gigaba during the official swearing-in ceremony of the new cabinet ministers in Pretoria.
Image by: AFP
Newly appointed finance minister Malusi Gigaba is expected to address renewed concerns about South Africa’s economy on Tuesday after the decision by ratings agency Standard & Poor’s to downgrade the country to junk status.
The move means it will be harder for South Africa to borrow money to invest in government projects.
The ratings agency said President Jacob Zuma’s midnight cabinet reshuffle on March 31 was too severe to wait until June 2 for its next scheduled review of SA’s sovereign rating.
The reshuffle spooked investors after Zuma announced that he had removed respected finance minister Pravin Gordhan and his deputy Mcebisi Jonas. Gordhan and Gigaba are due to meet on Tuesday for a handover meeting.
A few hours after S&P announced its decision on Monday‚ Moody’s said it may follow suit‚ citing the same concerns.
Gigaba has embarked on a charm offensive to allay concerns about the country’s economic policies. He downplayed fears‚ saying that it would not take long for the country to work its way back from a lower rating.
National treasury suggested on Monday night that the S&P downgrade was no cause for alarm.
“Government notes the sovereign rating announcement by S&P. While S&P has lowered its rating of foreign currency-denominated debt to a sub-investment grade‚ rand denominated debt – which constitutes 90 per cent of the debt portfolio – retains its investment-grade rating‚” treasury said in a statement‚ released before Moody’s made its announcement.
“South Africa is committed to a predictable and consistent policy framework‚ which responds to changing circumstances in a measured and transparent fashion. Open debate in a democratic society should not be a cause for concern‚ but reflects an important means to accommodate differing views. South Africa’s constitutional arrangements remain robust. These key institutional strengths are acknowledged by rating agencies.”
It said Gigaba would address the media at 9.30 on Tuesday.