South African Finance Minister Tito Mboweni warned that the government’s failure to ramp up structural reforms will result in the country losing its last-remaining investment-grade credit rating.
Taking to Twitter early Friday morning, Mboweni said he was frustrated by policy “inertia” in Africa’s most-industrialized economy.
His comments echo criticism by business leaders that President Cyril Ramaphosa isn’t moving fast enough to implement policy changes needed to revive flagging economic growth.
Mboweni called for “movement” on implementing reforms including easing visa rules and releasing broadband spectrum that the National Treasury has said could boost the average growth rate by 2.3 percentage points and create more than a million jobs over a decade. The reforms were first proposed in a policy paper 27 August.
If you cannot effect deep structural economic reforms, then game over! Stay as you are and you are down graded to Junck Status!! The consequences are dire. Your choice. Yep!! Askies!!
— Tito Mboweni (@tito_mboweni) January 10, 2020
Earlier this week, the World Bank became the first key institution to cut its growth forecast for South Africa to below 1% for 2020 because of electricity-supply concerns.
That’s as rolling blackouts by Eskom weigh on an economy stuck in its longest downward cycle since 1945.
Power cuts coupled with delays in policy implementation, deteriorating public finances and the threat of South Africa losing its sole remaining investment-grade credit rating at Moody’s Investors Service dragged business confidence down to the lowest level in 34 years in 2019.
Moody’s lowered the outlook on the nation’s Baa3 assessment to negative in November, effectively giving lawmakers just over three months to preserve the assessment.
A downgrade would leave South Africa without an investment-grade ranking for the first time in 25 years. That would result in it being removed from the FTSE World Government Bond Index, which could prompt a selloff and lead to outflows of as much as $15 billion, according to Bank of New York Mellon Corp.