JOHANNESBURG – Standard and Poor’s Global has given the South African government a clear warning that a fiscal change was necessary, and the earlier the better.
This comes after the rating agency further downgraded the country’s local currency debt to junk status on Friday last week.
Global and local economists also share the same sentiments, adding that credit downgrades could lead to job losses if the government fails to provide real solutions to avoid further downgrades in the future.
Standard and Poor’s Global has now joined ratings agency Fitch which has also placed South Africa’s both local and foreign currency ratings below sub-investment grade.
Moody’s on the other hand has placed the country under review, but has clearly kept its ratings just one notch above junk status.
Economists says the Finance Ministry in South Africa is supposed to provide clear objectives and measures so as to win investor confidence, which is key to the growth of any economy around the globe.
The Finance Ministry has vowed to stop the downgrade slide, saying it will outline decisive and specific policy measures to strengthen a sustainable fiscal framework by the end of February 2018.
According to Mike Schussler of economist.co.za disagrees; the problem with the Finance Ministry is that it always makes plans but never implement them.
“The problem with that is we’ve always been told we have plans. The problem is on the implementation side.”