The Banking Association's Response to Fitch Announcement

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7 April 2017

STATEMENT BY CAS COOVADIA, MD OF THE BANKING ASSOCIATION OF SOUTH AFRICA

The downgrading by Fitch, of both the foreign and local currencies of SA to sub-investment grade is devastating, though not unexpected. 

The fact that Fitch has directly attributed its downgrade to the actions of the President demonstrates in no uncertain terms the broad assertion that the Cabinet reshuffle, although the prerogative of the President, was not in the national interest. 

A presidential prerogative cannot be exercised in a reckless manner, with insufficient regard for the consequences of such prerogative. SA is now experiencing the dire consequences of the actions that started with the precipitous calling back of the previous minister from a critical roadshow. One has to ask if we would, as a nation, be in this position if we were not forced to abandon interactions with investors and rating agencies. 

It is critical that government and the ruling party take heed as South Africa continues to slide backwards because of poor leadership and an inability to act in the national interest over what seems to be the interests of the ruling ANC itself.  

This additional downgrade is of greater concern as it includes a downgrade of the Rand, after the local-currency rating was also lowered one level to junk. This will have an immediate and severe impact on the currency, will seriously impact on our ability to attract foreign investment and will likely trigger a marked steep rise in prices of goods and services across the board. South Africa is poorer today. 

Ends

 

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© The Banking Association South Africa 2017