JOHANNESBURG – Restoring business and consumer confidence and catalysing inclusive economic growth are the government’s top priorities, the National Treasury said on Saturday following the latest ratings by agencies S&P and Moody’s.
Standard & Poor’s downgraded South Africa’s local currency debt to junk status on Friday evening, while Moody’s placed the country on review for a downgrade.
The Treasury said in response that speculative grade ratings had “negative implications” for economic growth, borrowing costs, state-owned companies’ ability to borrow, and to the public.
The government was “working urgently and diligently on practical steps to provide the necessary policy certainty, environment conducive to investment, and predictability that the country needs”.
Over the next two weeks, the government would consider a package of measures to achieve the R40-billion in spending cuts or tax increases that were outlined in the medium-term budget.
“Decisive management of government spending and closing the revenue gap were critical to achieving sound public finances, the statement said.
On Thursday, Fitch kept South Africa’s rating at status.
The Treasury said the government would search for “the root causes of the revenue gap of R50-billion arising from the under performing economy and a possible erosion of revenue-collection capability”, the statement said.
Business Leadership South Africa described the deteriorating ratings as a setback for South Africa.