Mboweni convinced South Africa could un-junk itself
3 Dec 2018 - by
Speaking to journalists on the side-lines of the G20 summit in Buenos Aires, Finance Minister Tito Mboweni pledged to prioritise the restoration of South Africa’s above-grade rating by the world’s three leading investment assessors.
Moody’s has consistently warned that South Africa could lose its last junk-free rating if it didn’t implement fiscal prudency such as slashing government spending.
One way of doing so would have been an announcement in October during Mboweni’s medium-term budget speech that the government’s wage bill will be slashed, but unions warned of widespread strike action in the event of layoffs.
It called for fine footwork from Mboweni and Moody’s thankfully refrained from downgrading the country, despite precious little being done to cut government spending.
Fitch and S&P Global downgraded the country in 2017 and it’s those junk ticks against South Africa’s investment rating that Mboweni has placed in his cross hairs.
He said “it’s priority number one because we have to get out of the status that we are in and back to proper investment grading and we are working hard at this”.
He mentioned policy certainty and credibility, lowering debt, and showing fiscal restraint to bailout struggling state-owned entities.
His optimistic comments were starkly contrasted by recent developments at SAA as well as Eskom’s teetering fortunes that have yet again led to load shedding.