Featured

Following last week’s contentious Cabinet reshuffle, South Africa has been downgraded to sub-investment or “junk” status. Standard and Poor’s Global Ratings (S&P) said the executive changes “have put at risk fiscal and growth outcomes” in a statement, adding that the downgrade “reflects our view that the divisions in the ANC-led government that have led to changes in the executive leadership, including the Finance Minister, have put policy continuity at risk.”

Finance minister Pravin GordhanPresident Jacob Zuma fired Finance Minister Pravin Gordhan in favour of Malusi Gibaba in the reshuffle. With Gordhan largely having been seen as the only thing standing between the country and a downgrade, the decision comes as no surprise to economists.

The Federation of Unions of South Africa (Fedusa) even issued a statement to the effect that the downgrade came as a result of “self-inflicted pain and bad leadership”. “We were going to London, New York and Boston to meet with ratings agencies and investors, then the president decided to cancel the trip, call back the minister of finance and announce in the night a cabinet reshuffle, and this is the consequences of bad leadership,” Dennis George, Fedusa’s General Secretary told reporters when the downgrade was announced.

One newspaper pointed out that it took just 90 hours after the President fired Gordhan for South Africa’s credit rating to be downgraded. This is the first time in 17 years.

“The rating action also reflects our view that contingent liabilities to the state, particularly in the energy sector, are on the rise, and that previous plans to improve the underlying financial position of Eskom may not be implemented in a comprehensive and timely manner,” S&P said. “Higher risks of budgetary slippage will also put upward pressure on South Africa’s cost of capital, further dampening already modest growth. The negative outlook reflects our view that political risks will remain elevated this year, and that policy shifts are likely, which could undermine fiscal and economic growth outcomes more than we currently project.”

The downgrade will affect all sectors of the economy. In the longer term, it will lead to higher interest rates and an increase in the risk premium. This means that lenders increase interest rates because of a perceived greater risk in default. Additional pressure will also be put on the Rand, causing a rise in the price of imported goods.

Image credit: https://www.flickr.com/photos/governmentza/12792269543

Magazines

African Fusion

AfricanFusionAfrican Fusion, the official publication of the Southern African Institute of Welding (SAIW), aims to provide up-to-date insight into welding technology and the welding industry.

Capital Equipment News

Capital Equipment News is dedicated to the application of equipment and modes of transport that are used in the mining, construction, quarrying, and transport industries.

Construction World

ConstructionWorldConstruction World was first published in 1982 and has grown to become a leader in its field, offering a unique mix of editorial coverage to satisfy the diverse needs of its readers.

Electricity + Control

ElectricityandControlE + C publishes innovative, technical articles that provide solutions to engineering challenges in measurement, automation, control, and energy management.

Lighting in Design

LightingandDesignLighting in Design is a glossy, upmarket publication aimed at lighting professionals. It is the only B2B magazine in SA that is dedicated solely to the subject of lighting.

MechChem Africa

MechChemJanuary2017cover MechChem Africa supports African engineering and technical managers across the full spectrum of chemical and mechanical disciplines.

Modern Mining

ModernMiningEstablished in 2005, Modern Mining is one of SA's leading monthly mining magazines, noted for the quality and accuracy of its writing and the breadth of its coverage.

Modern Quarrying

ModernQuarryingModern Quarrying is firmly entrenched as a leading industry-specific magazine. It focuses on promoting the science and practice of quarrying and processing in southern Africa.

Sparks Electrical News

SparksElectricalNewsReadable and informative, Sparks Electrical News is the newspaper for those involved in installing and maintaining electrical supplies and equipment.

 
Full Name*
Invalid Input

Company Name*
Invalid Input

Your Email*
Invalid Input

Phone*
Invalid Input

Postal Address 1*
Invalid Input

Postal Address 2*
Invalid Input

Postal Code*
Invalid Input

Street Address 1
Invalid Input

Street Address 2
Invalid Input

Postal Code
Invalid Input

Town / City*
Invalid Input

Country*
Invalid Input

Magazine

Invalid Input

Invalid Input