Finance Minister Pravin Gordhan’s recent weeklong roadshow to the US and Britain saw the country presenting a united tripartite front that sought to reassure anxious international investors that government, labour and business were united in stabilising the country’s fraught climate, averting a ratings crisis.
The minister’s “non-deal” tour did not aim to conjure further funding, but rather saw Gordhan – along with representatives from labour unions and some of the country’s largest listed firms – meeting more than 250 moneylenders who hold interests in the country worth in excess of R600 billion.
Gordhan told a press conference in Johannesburg yesterday that concerns were raised by investors around possible fiscal risks and strain in the balance sheets of state-owned companies; recent developments on the sovereign debt ratings; slow economic growth; regulatory uncertainty; labour; and the political environment.
“The answers to these questions were obvious and clear… [we have] shown a great deal of fiscal discipline since democracy and will continue to do so. We also have space to cut expenditure further, so we could arrest their questions,” he said.
The minister further alluded that South Africa’s risk of being downgraded to “junk” status by ratings agency Moody’s – which will this week review the country’s level of investment risk – had possibly been prevented, following promising meetings between government and several of the ratings agencies since the release of the 2016 National Budget last month.
“To add some spice … our interactions with rating agencies were very constructive, including with Moody’s … which indicated that they would give [South Africa] some breathing space.”
Noting that investors had called for “concrete activity” that demonstrated government, labour and businesses’ commitment to economic and policy stabilisation, Gordhan added that the partners were developing “milestones” that could be used as a litmus test of commitment to promises made.
South Africa must now provide evidence that it was no longer “just talking”, he said.
“There is an issue of credibility that we have to win back as a society and an economy. The key message is that the world is watching South Africa very clearly. Many have been invested for a long time, and they still have confidence that we have the ability to grow.
“The time is now for South Africa to show similar confidence and ensure that people who doubt our credibility are given constant signals that business, government and labour will work towards national interests. And I’m convinced we can do this,” Gordhan said.