It was only a matter of time. Apart, perhaps, from the swiftness with which S&P Global Ratings acted, a sovereign downgrade to South Africa's foreign and local currency credit ratings had broadly been anticipated. To be fair to the ratings agencies, they have been more than patient with South Africa, consistently communicating the need for structural reform that would elevate it to a higher, more inclusive growth path. The downgrade of our debt did not stem from deteriorating macroeconomic fundamentals - they have actually been improving. Instead, rising concerns over political and institutional uncertainty in the wake of the cabinet reshuffle, rising pressure on the fiscus from underperforming state-owned enterprises and concerns that there may be deviations from policy measures that would undermine fiscal consolidation and growth are to blame. There appears to have been little formal communication in the days before the reshuffle to allay the fears of the ratings agencies. At a pr...
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