DOWNGRADES
Recession 101 — for those in charge of SA
The ANC needs to wake up to the reality that scaring off investors is the quickest way of ensuring that the poor remain poor
In its scariest statement in some time, the ANC has admitted it does not fully understand the implications of credit rating downgrades and conceded that SA may well be heading for recession. That is a huge admission from a political party entrusted with the livelihood of 55-million South Africans. The greater tragedy is that this situation was created on the whim of one man, President Jacob Zuma, who in a single swoop condemned the country to years of economic hardship. The well-respected former finance minister, Pravin Gordhan, in collaboration with labour and business, managed to persuade international investors that we are on a stable path, politically, economically and fiscally. In one day, Zuma showed that to be an illusion. The rating downgrades to junk by S&P and Fitch have placed SA in a very difficult position. The immediate result is that the cost of borrowing for the government, corporates and state-owned enterprises has gone up, and hence less money is available to spend...
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