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With the threat of an economic downgrade looming this weekend the ANC national executive committee meeting was hard-pressed during its meeting last weekend to come up with solutions on how to revive the country’s ailing economy.
ANC secretary-general Gwede Mantashe said today the party had identified “actions that will aid economic recovery, directly and urgently”, focusing on “accelerated implementation” of the government’s nine-point plan to grow the economy and create jobs.
Mantashe said halting the decline in South Africa’s economic growth forecast could be achieved through security of energy supply, revitalisation of agriculture and agro-processing, creating a friendly environment for private investment, as well as a re-evaluation and reform of the role of state-owned companies and development funding institutions.
Ahead of this week’s decision by both Fitch and Standard & Poor’s (S&P), economists said a downgrade of South Africa’s credit rating to junk status would unleash a “shock” that could knock the country into a recession and place jobs at risk.
Such a decision by S&P could place up to 800 000 jobs at risk, Standard Bank economist Goolam Ballim said last week.
Like rival Fitch Ratings, S&P’s existing rating was just one point above sub-investment grade, or junk status.
This was in contrast to the way Moody’s Investors Services saw South Africa. Earlier this month, it affirmed the country was two notches above junk status. S&P has its credit rating of South Africa on a “negative” outlook, but Fitch has its local rating on “stable”.
Recurring threats that Finance Minister Pravin Gordhan was under criminal investigation were seen to be creating political instability and therefore increasing the chances of an economic downgrade. However, Mantashe said today South Africa must not do things “to impress ratings agencies”.
He said “many of us must disabuse ring-fencing the minister of finance and putting him out there as an institution”.
Mantashe said “institutionalising Gordhan was dangerous and must be resisted”.
He said that positioning Gordhan as separate from the institution – treasury – “would only isolate him”.
He said that if there were issues in treasury “let’s deal with that and not isolate and weaken Pravin from collective”.
“You make him be targeted as an institution called Pravin Gordhan. When you do that, you are actually harming him,” said Mantashe.
