DA: Fitch downgrade to junk status a vote of no confidence in Gigaba

The DA says Fitch’s downgrade is a vote of no confidence in Malusi Gigaba’s ability to hold the fiscal line and stabilise debt.

New Finance Minister Malusi Gigaba speaking at his first media briefing  in Pretoria. Picture: Kgothatso Mogale/EWN.

JOHANNESBURG - The Democratic Alliance (DA) says the new Finance Minister Malusi Gigaba’s attempts to restore confidence and engage ratings agencies, has failed to convince Fitch ratings not to downgrade South Africa.

The opposition party says Fitch’s downgrade is a vote of no confidence in the finance minister’s ability to hold the fiscal line and stabilise debt.

The ratings agency is the latest to downgrade South Africa to junk status, after Standard & Poor’s Global downgraded the country to junk status earlier this week.

DA’s shadow minister of finance David Maynier says it’s not good enough for the minister to simply concede the ratings downgrade is a setback.

“The minister needs to roll up his sleeves and get into the fight to avoid further ratings downgrade. The minister’s number one priority should be avoid the nightmare scenario massive forced selling on our debt triggers a massive meltdown which will spare nobody, rich or poor.”

WATCH: Gigaba: I knew credit rating downgrade was coming

Downgrades to junk from the two agencies could see South Africa drop out of some widely used global bond indexes and force international funds which track them or which are prohibited from holding sub-investment grade securities to sell.

Fitch's move will almost certainly lead to a rise in government debt-servicing costs, which will mean less money for critical services such as housing, education and sanitation, which could incite even more protests over service delivery that have already rocked towns across the country.

(Edited by Winnie Theletsane)