SA junk status fears returnThe African National Congress (ANC) reformists who are seeking to stave off a ratings downgrade have been dealt a major blow. As Gordhan blow hits rand The African National Congress (ANC) reformists who are seeking to stave off a ratings downgrade have been dealt a major blow. News that South African Finance Minister Pravin Gordhan must present himself to the Hawks today has sent shock waves across the world.Those seeking to stave off a ratings downgrade have been dealt a major blow, was the reaction from economists Dawie Roodt and Peter Montalto, as well as political commentator Daniel Silke on Tuesday.
The rand fell nearly 3.41% and was at a three-week low yesterday as a result of the news. “This is very bad news for us,” said Roodt. “The rand is reacting badly. This is not good for us.”
Nomura emerging markets economist Montalto told Fin24 that the rand would hit R17/US$ by the end of the year. “There is no way the SARB will cut (interest rates) in a political climate like this,” he said on Tuesday.
Treasury confirmed that Gordhan was summoned to " present" himself to the Hawks by 10:00 today, EWN reported.
Former Sars deputy commissioner Ivan Pillay, group executive Johann van Loggerenberg and initial head of the investigative unit, Andries van Rensburg were also asked to report to the Hawks, Daily Maverick reported.
Zuma is not directly linked to who the Hawks investigate, but political analysts believe the investigation has a political dimension to it ahead of next year’s ANC elective conference.
It also comes as some members within the ANC - the reformers - attempt to keep South Africa from sliding into junk status, which would be disastrous for the country as an investment destination and would see an increase in inflation and unemployment.
Silke said South Africa is “entering a danger zone for the reformers”.
“We knew it would come down to the reformers to really act and provide concrete measures for ratings agencies not to downgrade us later this year,” he said. “These look like they are conflicting with those with who retain the status quo, Zuma and his inner circle.”
Silke said the election put this all on ice, and with the dust hardly settling it has started again.
“The danger is that any attack on the finance minister can plunge the country into a Nenegate scenario,” said Silke. “It means an extreme loss in confidence in our capacity to deliver a coherent economic policy.
NEWS24