https://www.miningweekly.com
Africa|Business|Mining|Ports|rail|Services|System|Systems
Africa|Business|Mining|Ports|rail|Services|System|Systems
africa|business|mining|ports|rail|services|system|systems

Minerals Council bemoans downgrades, asks for urgency in action

Minerals Council South Africa CEO Roger Baxter

Minerals Council South Africa CEO Roger Baxter

23rd November 2020

By: Marleny Arnoldi

Deputy Editor Online

     

Font size: - +

The Minerals Council South Africa has expressed its concern about the sovereign ratings downgrades by agencies Moody’s and Fitch on November 20, which pushed South Africa deeper into “junk territory”.

While not unexpected, the ratings downgrades reinforce the fact that South Africa faces a deep economic crisis which, if not rapidly arrested, will continue to plunge the country into a vicious socioeconomic downward spiral towards a full-blown sovereign debt crisis which will cause significant economic pain to all South Africans.

The council says countries that have faced such sovereign debt crises normally end up in tough structural adjustment programmes, an extended low-growth and high unemployment period, with heavily depreciated currencies, high inflation and rising living costs.

The council adds that it normally takes a decade to recover.

The Moody's downgrade places South Africa two notches into junk status, while the Fitch downgrade places the country three notches below junk status. Fitch downgraded South Africa’s long term foreign and local currency debt ratings to ‘BB-‘ from ‘BB’, while maintaining a negative outlook. Moody’s downgraded South Africa’s long term foreign and local currency debt ratings to ‘Ba2’ from ‘Ba1’, also maintaining a negative outlook.

Although Standard and Poor’s (S&P's) has kept its investment outlook at neutral, overall, this was South Africa’s worst rating from the big three rating agencies since 1994.

Minerals Council South Africa CEO Roger Baxter has again reiterated his call for government leadership and other key role players to act together, decisively and rapidly.

“Unless decisions are made on urgent structural and institutional reforms that boost competitiveness and private sector involvement and investment, we will continue on this downward trajectory, trapped in a vortex of our own making.”

The critical structural reforms include the urgent fiscal consolidation plan as originally proposed by National Treasury in the Supplementary Budget announced on June 24; the urgent review and restructuring of State-owned enterprises to ensure that these place no further burden on the fiscus; the urgent opening up of key government controlled markets to private sector investment and competition (rail, electricity, ports); and a significant focus on policy and regulatory reforms that improve policy certainty and the ease of doing business in the country.

Baxter believes that institutional reforms must include a significant improvement in the delivery of services by government including reducing red tape, implementing smart tape systems, reorganising departments and better use of digital platforms and private sector capability within government.

This could greatly assist in fighting crime, improving the efficacy of the courts system and in improving licensing systems within all spheres of government.

“We are seriously concerned about the lack of urgency displayed by key parties, but especially government. We recognise that all social partners should have a voice, but it is not the role of government to try and achieve consensus.

“It is the role of government to govern, to take the tough decisions on critical reforms, while harnessing the inputs of stakeholders, in the interests of the country as a whole,” Baxter laments.

The Minerals Council on a previous occasion stated that the Economic Reconstruction and Recovery Plan is a start, but does not address the critical structural and institutional reforms that will make a significant difference to first arresting the crisis and then getting the country’s economy growing out of the crisis.

Baxter says the mining industry is committed to investing in the sector and in South Africa, but it can only do so if long-standing and repeatedly identified structural and institutional reforms are acted upon.

“There is no further time for debate. This is the time for action,” Baxter concludes.

His views are echoed by Business Unity South Africa, Business Leadership South Africa and the North West University Business School, which all have respectively called for proper implementation of South Africa’s structural reforms.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Showroom image
Alcohol Breathalysers

Supplier & Distributor of the Widest Range of Accurate & Easy-to-Use Alcohol Breathalysers

VISIT SHOWROOM 
Stewarts & Lloyds
Stewarts & Lloyds

Stewarts & Lloyds today supplies steel and tube, pipe and fittings, valves, pumps, irrigation, fencing, profiling and roofing products. The cash...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.151 0.182s - 107pq - 2rq
Subscribe Now