EXCLUSIVE: Dept Finance Minister Masondo's thoughts on SAA & SA's credit ratings
In a wide-ranging interview with Eyewitness News on Wednesday, Deputy Finance Minister David Masondo disagreed with pundits who questioned why the country was further downgraded.
JOHANNESBURG - While Deputy Finance Minister David Masondo said that South Africa’s latest downgrades from ratings agencies was painful, he said it is more important to focus on reforms that would help change the country’s fortunes.
In a wide-ranging interview with Eyewitness News on Wednesday, Masondo disagreed with pundits who questioned why the country was further downgraded.
He said it was a question of science – with rating agencies simply making an assessment based on the facts.
Fitch and Moody’s further downgraded South Africa into junk status last week.
Masondo said that while South Africans could have different views regarding the country being further downgraded into junk status, they must appreciate that rating agencies only dealt with the facts placed before them.
“I think we do need to separate the science and morality, the view that we may have our feelings about their decisions,” Masondo said.
He said that while government was trying its best to control expenditure, it remained a worrying issue along with an economy that had no prospects of growth.
Masondo said that like a bitter pill, the recent assessments were due to circumstances beyond the country’s control, including the impact of COVID-19.
“It’s like when you’re sick and you’re not able to go to work and therefore you’re not able to generate an income. Unfortunately, the system works on the basis of whether someone is able to pay or not,” he said.
Calling it unfortunate, he said that this was the pain the country had to absorb as it worked towards changing South Africa’s current challenges.
At the same time, Masondo said that South Africa did need a national carrier, but one that was not a burden on the country’s fiscus.
The deputy minister said that a national carrier should not need to be constantly bailed out.
In recent days, Finance Minister Tito Mboweni has been pushing for South Africans to debate the matter via his Twitter account.
In October, he announced that South African Airways (SAA) would be given more than R10 billion to implement its business rescue plan.
Following years of bailouts from government, SAA could be set to continue in that trajectory. And while Mboweni's questioning its necessity has caught the ire of unions, Masondo said that a national carrier should not be a burden on the state.
“It has always depended [on the state], it has never made a profit. And that’s not the national carrier that we want,” Masondo said.
Masondo also touched on the country’s plans towards economic recovery, which he described as sufficient but said that in some cases there was a push back against government plans.
“Because some of the reforms, they threatened certain interests, whether it is in energy or telecommunications, so, you’ll have resistance from certain actors in those economic sectors,” he said.
He admitted that the pace at which some of the plans were being implemented could be a lot faster.