After news was released about South Africa being downgraded to junk status social media immediately reacted with confused messages of what it actually means and some South Africans were shocked by the fact that the rating agencies released this statement a few days after the reshuffling of the ANC cabinet.
New Minister of Finance, Malusi Gigaba had a press conference two days after his appointment and touched on the new nuclear deal that will be implemented in South Africa. He described how the country will make strides slowly but surely to make sure the plans to move forward with the deal are executed properly.
This sparked an outcry on social media with some people saying that he had signed the nuclear deal with the Russians already because the minister emphasised an implementation of the project rather than negotiations still being discussed behind the scenes pushing people to think that the deal had already been sealed.
The down grades to junk status will definitely hurt our economy with negative consequences to all Safricans , especially the poor .— Jackson Mthembu (@JacksonMthembu_) April 4, 2017
Treasury came out the following day and denied these claims of a contract being said and that there are no documents relating to the nuclear deal that were dropped at their offices.
If this is the case, why did the Finance Minister have a press conference relating to nuclear deals being implemented and the government pushing for the project to work without signatures being put on paper?
Former Minister Pravin Gordhan also spoke about the nuclear deal during his term and he had stressed that South Africa cannot afford to embark on the project because we did not have the finances.
Now, that Gordhan was removed we all of a sudden have finances to implement the project.
Things that might have caused the recent downgrade to Junk status:
- The removal of Praying Gordhan and Mcebisi Jonas.
- President Jacob Zuma's decision to not consult his party leaders and disappear to another location to only come back with ano already made list might have deemed him untrustworthy and unreliable to the rating agencies.
- The prior history of the President reshuffling the Finance Minister position 3 times in one week might have motivated the decision to downgrade the country as well.
- Finance Minister Malusi Gigaba's phone call to the credit rating agency to reassure them about the recent cabinet changes and asking them to bare with him might have encouraged the downgrade.
Unemployment higher than in 94. Inequality rampant. Now #JunkStatus. This isn't just a political crisis, it's an economic one, too.— Sizwe Mpofu-Walsh (@SizweMpofuWalsh) April 3, 2017
It could take South Africa 7-12 years take recover from the 'junk status' downgrade if policies are adjusted, and these adjustments are made to improve the status and reputation of the government and the economy.
South Africa earlier avoided the downgrade back in June last year when Nhlanhla Nene was removed from office and replaced with Des Van Rooyen who was soon replaced with Pravin Gordhan who marshaled the road of recovery of the economy in South Africa into a respectable position.
Speaker of the Parliament Baleka Mbete is set to give her judgement on the request to allow an impeachment vote of President Jacob Zuma in Parliament today.
A vote of no confidence is also being discussed and Mbete said she isn't ruling it out.