JOHANNESBURG, The Banking Association of South Africa (BASA) says the country’s downgrade to junk status by international rating agency Standards and Poors (S and P) on Monday is a direct consequence of poor leadership.
The association says President Jacob Zuma’s deicison to remove Pravin Gordhan as Finance Minister is clearly not in the public interest. S and P, in taking its downgrade decision, also says last week’s Cabinet reshuffle has put South Africa’s economic growth at risk.
“Now this is a tragedy for the country because it increases the cost of funds,” BASA Managing Director Cas Coovadia said here Tuesday.
“(The cost of) Money that the country has borrowed to actually fund its budget goes up and as a result of that, we pay more for that money and and there’s less available for social development. People will pay more for money that they borrowed for a whole range of purposes and ultimately the biggest impact will be on poor people who have little choice of possibilities.”
Another leading international rating agency, Moody’s Investor Service, has placed the government’s Baa2 rating on review for downgrade, a move likely to further shake investor confidence.
Source: NAM NEWS NETWORK