We are still trying to understand implications of junk status - Godongwana

2017-04-09 15:29
Enoch Godongwana. (Netwerk24)

Enoch Godongwana. (Netwerk24)

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It is a setback but we have no reason to be despondent - Gigaba on ratings downgrade

2017-04-04 13:48

In his briefing following his meeting with Pravin Gordhan, newly-appointed Finance Minister Malusi Gigaba revealed that the government was already aware of S&P's decision to downgrade South Africa to junk status on Friday.WATCH

Johannesburg – The chair of the ANC's subcommittee on economic transformation, Enoch Godongwana, say they are yet to understand the full implications of "junk status" at this stage.

Ratings agencies Fitch and Standard & Poor's in the past two weeks both downgraded South Africa to junk status. 

Godongwana said people in South Africa had never known junk status before. The only time the country had come close to it, was in 1985. 

Godongwana was speaking at a media briefing where some of the ANC's policy documents ahead of the party's policy conference in June were discussed. He hit out at those who said they welcomed the country's downgrade to junk status.

He said there can be no radical transformation in the face of a possible recession.

“Recession means the economy is not growing, it's contracting. If it happens in the context of 27% unemployment, you will be adding more people to the pool of unemployment and be excluding more people from the income stream so that can’t be an inclusive growth,” Godongwana said.

He said there was a need to engage those who had welcomed a ratings downgrade.

“Those comrades who do not understand this particular phenomenon, we still have to engage them to understand the consequences,” he said.

ANCYL, Makonyane

The ANCYL recently announced that it welcomed the country's downgrade while Water and Sanitation Minister Nomvula Mokonyane told ANCYL members at a rally that the,"Rand can fall, we will pick it up."

Godongwana said it was important for leadership in the country to support new Finance Minister Malusi Gigaba and to share messages aligned with his position on the country’s economy.

He warned that if this did not happen, it would place the country’s credibility under risk.

Although the briefing tried to stick to policy issues without discussing current events, Godongwana shared his views on reports over the recent announcement that the nuclear-build programme would kick off in June.

“We said recently that if we do nuclear, we must do it at a scope and pace which is affordable. The test becomes affordability; will the country be able to afford it?” he asked.

He said South Africa, in light of the junk status would need to “sharpen its pencils” and revise its expenditure patterns.

Godongwana said government would have to take a closer look into the finances of state-owned enterprises if it wants to effectively respond to the downgrade.

Read more on:    anc  |  ancyl  |  malusi gigaba  |  enoch godongwana  |  nomvula mokonyane  |  johannesburg  |  economy  |  politics 2017

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