The Minerals Council South Africa has welcomed the announcement by ratings agency Moody’s that it is unlikely to downgrade South Africa’s sovereign risk rating, and its recognition of the many unique circumstances that set South Africa apart from its peer group.

“We note, however, their close scrutiny of the way in which the South African government will actively deal with its growing debt burden, as well as how and when the promised institutional changes at State-owned enterprises will be effected and start to deliver results,” the council said.

The council highlighted that Finance Minister Tito Mboweni’s Medium-term Budget Policy Statement, which is likely to be delivered in October, was the next critical review point.

Minerals Council CEO Roger Baxter noted that a key focus now should be on government implementing a number of serious structural reforms to get the economy back on track.

He also indicated the Minerals Council’s broad support for the National Treasury’s ‘Economic Transformation, Inclusive Growth and Competitiveness: Towards an Economic Strategy for South Africa’ document, published for comment on August 27.

“This document reflects a serious effort to construct a practical long-term economic strategy based on the National Development Plan. It is a holistic strategy, with sequencing of interventions, timelines, sectoral implications, and underpinned by economic modelling.

“Importantly, this strategy reflects a coherent exposition of the far-reaching policy tradeoffs which need to be made to get the South African economy back on a growth trajectory.

“It recognises that growth and competitiveness are interdependent, and will require substantial modernisation of network industries – electricity, telecommunications, transport and water – and preferably private sector competition,” Baxter commented.

The need for integrated growth and development strategies for various sectors and line departments’ support is an integral feature of the report, as is the role attributed to sound institutions in the six ”building blocks” for long-term sustainable growth.

The strategy provides a view on the linkages of mining into the economy, by recognising the importance of beneficiation.

It also emphasises the importance of improved productivity through investment in innovation.

There is also recognition that exporting sectors often rely heavily on imported intermediary inputs, and policy should therefore promote competitively priced intermediate inputs.

“The Minerals Council cannot overemphasise the criticality of policy certainty and, in particular, security of tenure, for long-term investment in the mining sector to be reignited.

“While Treasury might have authored the document, it will need broad-based support within government and the private sector. And, there needs to be an urgency in implementation and delivery.”