The intense focus on Pravin Gordhan’s possible removal as finance minister is driven by two principal concerns. The first is the fear that attempts to unseat him are orchestrated by those wishing to control and substantially increase, to their own benefit, government spending. Should this occur, it is argued, future budget deficits will soar out of control, undermining the sustainability of government finances and leading to economic and social instability. The second concern is that firing Gordhan will prompt the global agencies to downgrade SA’s credit rating to junk. This, most agree, would have painful consequences. Rhodes University graduate student Adriaan Slabbert has examined the eight countries downgraded to junk since 2000 and found that downgrades initially resulted in higher interest rates on bonds, raising the cost of government borrowing. The most severe effect on interest rates came during the six-month periods before and after the downgrade. Average interest rates ac...
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