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JOHANNESBURG (miningweekly.com) – The African National Congress (ANC) and South Africa’s citizens should hold President Jacob Zuma to account for the “illogical and damaging” Cabinet reshuffle which led to the country’s credit rating being downgraded to junk status by Standard and Poor’s (S&P’s), the Chamber of Mines said on Tuesday.
“The firing of a competent, dedicated and globally well respected Finance Minister Pravin Gordhan and other Cabinet changes, have materially negatively impacted the key institution of the National Treasury and ultimately the credit worthiness of South Africa’s government,” the CoM added.
It further highlighted that the downgrade would raise the cost of capital, increasing government and private borrowing costs, and increasing the portion of government revenue that has to be allocated to covering debt service costs – thus crowding out other key government programmes, weakening the currency, raising inflation and, ultimately, affecting investment, growth and employment creation.
“The poor will be especially impacted by higher inflation, less resources available for social grants, low investment, limited growth in employment opportunities and poverty levels will rise.
“Despite the significant effort by business, working with Treasury, other government departments and organised labour over the past 18 months to ensure that South Africa retains its investment grade rating, the irrational and unexplained decision by President Zuma to restructure Cabinet has precipitated this crisis,” it stated.