The Federation of Unions of South Africa (FEDUSA) is deeply disappointed that the government delegation decided not to show up at a National Economic Development and Labour Council (NEDLAC) Task Team meeting on Wednesday 12 July 2017 that had been called to chart the way forward following South Africa’s sovereign downgrading to sub-investment grade or junk status by credit rating agencies Standard & Poor and Fitch and to one notch below sub-investment grade by Moody’s earlier this year FEDUSA does not think the Inclusive Growth Action Plan of Government will stimulate growth because of policy uncertainty, low business and consumer confidence.
“Business and Labour waited for more than one hour for Government to arrive but they did not turn up. It seems to us that Government is not serious about sovereign downgrade, helping the economy to recover from low growth and rising government debt because the NEDLAC Executive Council (EXCO) special meeting that was chaired by Deputy President, Cyril Ramaphosa on 11 April 2017 had already agreed to urgently address the current challenges facing the country following the downgrade of the country’s investment status to junk,” says FEDUSA General Secretary Dennis George.
Explaining its actions in June, Moody’s said there was evidence of systemic erosion of the independence of key South African institutions such as the judiciary, the Reserve Bank and National Treasury in reference to the first trigger of the downgrade.
“The abrupt Cabinet reshuffle in March illustrate a gradual erosion of institutional strength. The institutional framework has become less transparent, effective and predictable. Policymakers’ commitment to previously articulated reform objectives is less certain. Moody’s Vice President, Senior Analyst and Lead Sovereign Analyst for South Africa, Zuzana Brixiova said in a statement at the time.
FEDUSA hopes that the government will now take the initiative to request NEDLAC to urgently reconvene the Task Team meeting in order for social partner leaders to come together and collectively address the issues that have been raised by the credit rating agencies and also work out strategies that will help rebuild international and local investor confidence in South Africa.
“The recent flip flopping by Public Protector Busisiwe Mkhwebane about tweaking the key mandate of the South African Reserve Bank (SARB) cannot be allowed to occur again in the future; we need a clear and unambiguous statement from government upholding the autonomy of the SARB to ensure macroeconomic stability and to prevent further sovereign downgrades,” said George.
“We call upon President Jacob Zuma to establish an impartial Judicial Inquiry into State Capture as recommended by former Public Protector Thuli Madonsela without any further delay”.
President Zuma has said that he is not opposed to such a Commission but has approached the courts for a legal review of Madonsela recommendation that Chief Justice Mogoeng Mogoeng appoints the Judge heading it.
George added that a responsible political leadership could not continue indulging in talk shops while thousands of school leavers swell the ranks of the unemployed every year nor allow the current debate on the highly emotive land issue to go on indefinitely without any decisive action as such a situation tends to create a climate of uncertainty for investors and instability in the country.
Preparations for the 2018/19 budget should not only be an inclusive process but should necessarily be focussed on addressing the vital issues that have been raised by the credit rating agencies if South Africa is ever going to move out of the sub-investment grade trap and on strategies of how the current deficit of R149 billion will be managed, concluded George.