During this interminable period of economic stagnation, with no prospects of an upturn in sight thanks in part to Donald Trump’s victory, South Africa desperately needs the “radical economic transformation” repeatedly promised by the ANC. Yet, there was nothing radical or transformative in the medium-term budget announced by Finance Minister, Pravin Gordhan last month.
Gordhan’s budget revealed how the foreign credit rating agencies’ threat of a “junk” rating was reaching maximum power just before they follow through with a dreaded downgrade. Under the agencies’ thumb, Gordhan felt compelled to adopt a deficit target for 2018 of just 2.5% (down from 3.9% last year and 3.4% this year).
Yet, within the next month rating agency Standard & Poor’s Konrad Reuss recently hinted, his firm is likely to be first to announce a downgrade, especially if Gordhan faces more unfounded state prosecution.