Cape Town - The DA has said that Friday's late night ratings downgrade of SA's long-term local currency debt by S&P Global Ratings amounts to a "vote of no confidence" in the new Presidential Fiscal Committee (PFC).
On Friday evening S&P downgraded South Africa's long-term local currency rating to 'BB+' - or junk - with a stable outlook, while rival ratings agency Moody's placed the country on review to be downgraded to junk.
On Thursday, meanwhile, the third major ratings agency Fitch had affirmed SA's long-term foreign and local currency debt ratings at junk with a stable outlook.
On Saturday DA finance spokesperson David Maynier said the announcements showed that the PFC was not working.
The committee, established in September, is an new advisory body that government says will coordinate with National Treasury and the Ministry of Finance to improve the state of SA's finances and offer proposals on spending priorities.
Opposition party members have, however, questioned how it will contribute.
Maynier said the downgrade by S&P showed the PFC hadn't been successful.
"The bottom line is that the ratings decisions of the two most important ratings agencies amount to a vote of no confidence in the new and mysterious 'Presidential Fiscal Committee’s' capacity to stabilise public finances over the medium term in South Africa," he said.
"Minister of Finance Malusi Gigaba’s strategy to delay the hard decisions necessary to hold the fiscal line and allow the budget to 'blowout' with national debt ballooning to R3.4 trillion, or 60% of GDP, in 2020/21 has backfired," he said.
In the wake of the downgrade Treasury said that the PFC and Cabinet would, over the next two weeks, consider a package of spending cuts of tax increases.
Earlier this month, after facing queries about what the precise mandate of the PFC was, and how it differed from Treasury, government put out a statement saying it was “advisory” in nature and would not usurp Treasury's role in crafting the budget.
Communications Minister Mmamoloko Kubayi-Ngubane said the committee would "not in any way interfere with the institutional arrangements of the budget cycle, which is the strength of our democracy”.
“Various inter-governmental forums exist at both the executive and official level to give effect to this constitutional imperative. The budget process allows for stakeholder participation and coordination with the various spheres of government,“ she said.
“It is mandated to make recommendations and to provide advice on spending priorities which may be considered. The minister of finance is the lead minister in the PFC. The committee is accountable to Cabinet."
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