https://www.engineeringnews.co.za

Gordhan pledges to avoid downgrade to junk – FT

Finance Minister Pravin Gordhan

Finance Minister Pravin Gordhan

Photo by Duane Daws

2nd February 2016

By: African News Agency

  

Font size: - +

South African Finance Minister Pravin Gordhan has pledged to defend the country’s credit rating and avoid it being downgraded to junk status, he told the Financial Times.

Standard & Poor’s changed its South Africa outlook from stable to negative in December on its rating which is one grade above junk status, making the threat of a credit rating downgrade to subinvestment likely.

“The consequences of [any] downgrade are well known, both within the Treasury and now within government . . . we make no secret of it,” Gordhan said in an interview with the FT. “We are very committed to restoring credibility in our fiscal path.”

If South Africa was downgraded, the government and its associated organisations would pay more to borrow, making this considerably harder. The rand would further weaken and funds would flow out of the country’s bond markets.

Gordhan was reappointed finance minister in December after President Jacob Zuma sent shockwaves through financial markets by appointing an unknown backbencher to the post until he reversed his decision four days later. The mishandling of the events running up to Gordhan’s appointment have threatened the hard-won credibility of South Africa’s Treasury and is deemed by many observers to have heightened the risk of a downgrade.

Gordhan, who was respected during a first period as finance minister from 2009-14, said the government and the ruling African National Congress had “a very profound and practical commitment to further fiscal consolidation”, as well as creating a “more dynamic growth path”.

“Finance ministers, in particular, are very good at not wasting crises, and in a sense, focusing the mind, both within government and outside, on the necessity to do the fiscally correct things,” Gordhan told the FT.

The chaos surrounding Gordhan’s appointment means he is under pressure to deliver an austere budget later this month. He is expected to outline measures to raise additional revenue and cut government spending under the watchful eye of wary rating agencies and investors.

Edited by African News Agency

Comments

Showroom

Rittal
Rittal

Rittal is a world leading provider of top-quality integrated systems for enclosures, power distribution, climate control, IT infrastructure and...

VISIT SHOWROOM 
Showroom image
Alcohol Breathalysers

Supplier & Distributor of the Widest Range of Accurate & Easy-to-Use Alcohol Breathalysers

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.07 0.123s - 137pq - 2rq
Subscribe Now