/ MEDIA STATEMENT / The content on this page is not written by Polity.org.za, but is supplied by third parties. This content does not constitute news reporting by Polity.org.za.

The irrational and irresponsible actions of President Jacob Zuma and whoever his advisors are, make a ratings downgrade by international ratings agencies to junk status a certainty. Simply put, a ratings downgrade to junk status will mean interest rates will go up, poor to no economic growth, greater unemployment, higher taxes, etc. What is even worse is that it will have a repetitive cycle, which means matters will continually worsen into a downward spiral that will be extremely difficult to get out of.

Fitch Ratings Senior Director: Sovereigns, Jan Friederich, has already indicated that the ratings agency views the recent developments in South Africa, together with relevant policy announcements from the new cabinet, may well result in Fitch reviewing its ratings on the South Africa sovereign.

“We believe fiscal consolidation is likely to become less of a priority and the move to improve transparency and governance of state-owned enterprises (SOEs) will be halted. SOEs' liabilities, and therefore contingent liabilities to the government, will probably grow more rapidly, particularly if a plan to postpone the commissioning of new nuclear power stations to 2037 is reversed.

“The cabinet reshuffle will heighten tensions within the ANC and increase political instability as the party focuses on its policy conference in June and leadership contest in December. The ANC faction weakened by the reshuffle is likely to fight back and challenges to the president could become more open. The political backdrop increases the risk that the government will resort to costly expenditure measures or legislation that will weaken economic growth to stabilise its support.

“Continued political instability that adversely affects standards of governance, the economy or public finances, was one of the ratings sensitivities we highlighted in November when we revised the Outlook on South Africa's 'BBB-' rating to Negative from Stable. Two other risk factors we highlighted in November that could be heightened by the cabinet reshuffle are: a failure to stabilise the government debt/GDP ratio or an increase in contingent liabilities; and a failure of GDP to recover sustainably,” says Friederich in a Fitch media statement.

So, the Saxonwold Shebeen, and whichever countries are involved in advising Zuma, have won this round. The new finance minister, Malusi Gigaba, has taken over from the respected Pravin Gordhan and is ready to sign off on a variety of unsavoury deals unless we as South Africans can put a stop to it.

Since the fall of Apartheid, it has been difficult to address transformation and inequalities in our society. A ratings downgrade has the potential to wipe out all the gains made over the years while the so-called radical transformation agenda of Zuma promises to be a perpetuation of the status quo whereby only a few of his connections will benefit. Wherever he falls short, the Guptas will make up for it.

The only way to stop this, is that we must keep up and grow the groundswell of resistance against this one man who is destroying our country. We again call on like-minded organisations to join the protest action every day. We also call on Business Unity South Africa to contribute by allowing workers time off to join the protest action close to their places of work.

We cannot let this one slip. The situation is serious. Let us unite so that our children can have a future in our country!

Issued by UASA