Global rating agency Standard & Poor’s have downgraded South Africa’s sovereign credit rating to ‘junk status’.

The Democratic Alliance (DA) says this proves that Minister of Finance Malusi Gigaba’s “strategy to delay the hard decisions necessary to hold the fiscal line and allow the budget to “blowout” with national debt ballooning to R3.4 trillion, or 60% of GDP, in 2020/21 has backfired”.

The DA said the major ratings agencies “have finally lost patience” with SA.

Standard & Poor downgraded their sovereign credit rating with a long-term foreign currency rating of “BB”, and a long-term local currency rating of “BB+”, with a “Stable Outlook”; and Moody’s affirmed their sovereign credit rating with a long-term foreign currency rating, and long-term local currency rating, of Baa3, with a “Negative Outlook”, but triggering a “review for downgrade”, which should be completed sometime after Main Budget 2018.

“The bottom line is that the ratings decisions of the two most important ratings agencies amount to a vote of no confidence in the new and mysterious “Presidential Fiscal Committee’s” capacity to stabilise public finances over the medium term in South Africa,” said the DA.

Restoring business and consumer confidence and ensuring economic growth are government’s top priorities following the decisions, said the National Treasury.

“Restoring business and consumer confidence, and catalysing inclusive growth is the top priority of government. To this end, government is working urgently and diligently on practical steps to provide the necessary policy certainty, environment conducive to investment, and predictability that the country so desperately needs. Decisive actions in managing government expenditure and closing the revenue gap are critical for achieving sound public finances,” National Treasury said on Saturday.

Sources: SANews, DA