RAY HARTLEY: How Zuma's firing of Gordhan severely damages South Africa
We have stepped through the looking glass and we are now in another country
It has finally happened. Against the advice of senior ANC leaders, business, his allies in Cosatu and the SACP and investors, President Jacob Zuma has fired finance minister, Pravin Gordhan. Make no mistake, this is a turning point for the country and the ANC. For the country, a ratings downgrade and junk status looms. This means that the cost of borrowing is about to go through the roof. This will raise the price of everything and add to the cost of investment in the South African economy. The currency is likely to be severely battered as the downgrade forces funds to sell South African bonds and assets. Government debt will rise significantly, reducing government's ability to allocate funds to its programmes as more and more money has to go to servicing debt. For government, the implications are enormous. The Treasury will lose its credibility as it becomes a clearing house for looting.