S&P: Downgrade not influenced by Gordhan’s sacking

S&P Global says its decision to downgrade SA’s sovereign credit rating was rather influenced by the instability in the country’s political landscape, fiscal slippage and slow growth

FILE: A Standard & Poor's document. Picture: AFP.

JOHANNESBURG - S&P Global says its decision to downgrade South Africa’s sovereign credit rating to junk status was not influenced by the sacking of former finance minister Pravin Gordhan, but rather the instability in the country’s political landscape, fiscal slippage and slow growth.

The ratings agency downgraded the country on Monday.

Fears of a downgrade were raised last week already when President Jacob Zuma announced his cabinet reshuffle, in which Gordhan was axed as finance minister and his deputy Mcebisi Jonas also given the boot.

Former home affairs minister Malusi Gigaba replaced Gordhan as Treasury's number one.

Credit analyst at S&P Global Ravi Bhatia said: “It’s not the individuals, it’s the fact that they were focused on trying to control the fiscal deficit. Now we feel the political landscape and all that will impact the fiscal story and there’s a higher risk of budgetary slippage.”

Deputy Reserve Bank Governor Daniel Mminele says the downgrade is a major setback.

However, he says the monetary policy committee remains ready to respond if need be.

Mminele says it’s too early to draw conclusions about whether recent political developments will represent re-assessment or re-pricing of South Africa’s credit.

(Edited by Zamangwane Shange)