SA is a resilient nation, says Gordhan after ratings announcement
Standard & Poor’s has decided to keep its rating for South Africa unchanged at triple b-minus.
"These sorts of things are always challenging but what we said in the budget still applies, that we are indeed a resilient nation and we have many things going for us."
The ratings agency's decision to keep the country at triple b-minus, with a negative outlook, avoiding junk status, is a huge relief for the country.
Gordhan says today's announcement proves that working together towards a common purpose can produce positive results.
"It is an extremely good start in my view. We've demonstrated that we have clear growth and a reformed programme that we've started implementing. The early evidenced is there.
"Clearly the challenge, over the next six months, is that we need to put a lot more substantial effort into issues surrounding increasing growth, confidence, changing our fiscal stance, reforming some of our state-owned outputs and undertaking changes in our labour environment."
He adds in the coming year, the country will have more time to make progress towards two percent growth and beyond.
On the country's political landscape, Gordhan says many nations face challenges.
"We are going towards elections and I think that we must to explain to the world that in any democracy you are going to get noisy periods. The UK is going through that; the US is going through that in a different way as they move toward their November elections. The Europeans are challenged by the migrant crisis. Similarly, major economies in the world are challenged in some way or the other."
He says this doesn't undermine that the country has increasingly strong institutions that can be relied upon to strengthen democracy.
ECONOMISTS WELCOME DECISION
Economists have welcomed the decision by S&P Global.
Lesiba Mothatha, chief economist at Investment Solutions, says this shows that Gordhan, along with the Treasury, business and unions, have done enough to keep the country from falling into junk status.
"It gives a thumbs up to the effort put in by National Treasury and the finance minister. While we have issues in the country, I think they're fixable. When we have an opportunity from Standard & Poor's, we ought to make it count."
Economist Thabi Leoka says the move will strengthen the rand, but there are some concerns noted by the rating agency.
"They did warn that rising political tensions are accentuating vulnerability in the country's sovereign credit profile."
Isaac Matshego, an economist at Nedbank, says the announcement was not a major shock.
"The next review will be in December this year. We are very worried about the wage negotiations, particularly in the mining sector."
National Treasury has also welcomed the decision by S&P Global Ratings, saying it will give government more time to demonstrate the concrete implementation of reforms.
Meanwhile, the rand has recovered dramatically. At around 6pm, the rand was trading at around R15,11 to the US dollar, R21,93 to the pound and R17,11 to the euro.