South African public protector Thuli Madonsela was due to release a report Friday involving allegations that the Gupta family acted on behalf of President Jacob Zuma, but Zuma’s office said on Thursday that the report is on hold by court order.
A few days ago, Finance Minister Pravin Gordhan was ordered to appear in court over alleged fraud in giving early retirement to former South African Revenue Service deputy commissioner Ivan Pillay.
Any attempt to undermine South Africa’s key institutions like the Treasury Department would see the country likely downgraded to junk status, rating agency Standard & Poor’s (S&P) said Thursday, according to Mail & Guardian:
Without threatening a downgrade in a careful address, S&P sub-Saharan Africa managing director Konrad Reuss told the Thomson Reuters Africa Summit in Cape Town on Thursday that any attempt to undermine South Africa’s institutions would be “a negative” for the agency.
He identified key institutions like Treasury, the South African Reserve Bank and the courts.
Fitch Ratings and S&P both have South Africa’s credit rating at one notch above junk status (BBB- with a negative outlook). Moody’s is slightly better at Baa2 with a negative outlook.
S&P is set to deliver its next ratings review on Dec. 2.
The current political situation in South Africa is not business as usual, Eyewitness News reported.
“This is not about political noise. We have political turmoil, political tension that can undermine structural reforms,” Reuss said.
South Africa’s growth has stagnated in 2016, with the SA Reserve Bank expecting 0 percent growth in 2016.
Credit ratings have a significant impact on South Africa, Mail & Guardian reported:
They impact its borrowing costs. This is because ratings are used by sovereign wealth funds, pension funds as well as other investors to determine the creditworthiness of a country.
“Rising political tensions are accentuating vulnerabilities in the country’s sovereign credit profile,” S&P said in its June review.
“Political tensions have increased in South Africa since the removal of former Finance Minister Nhlanhla Nene on December 9, 2015, the Constitutional Court ruling against President Jacob Zuma on March 31, 2016 and periodic disputes between key government institutions and within the ANC.
“We believe that these political factors – if they continue to fester – could weigh more on investor confidence than inconclusive labor or mining sector reform.
Zuma launched a last-minute legal bid to block the publication of an investigation into his ties to the Guptas, the business family accused of influencing government appointments and using their political ties to win state contracts, Financial Times reported.
Madonsela, the public protector — a role similar to an ombudsman — was due to release her findings into “state capture” on Friday following months of allegations against Zuma and the Guptas, who control a business empire that stretches across mining, computers, media and manufacturing.
Zuma hired Madonsela. Her seven-year term ends Friday.
Her report could find that Zuma violated ethics laws, adding to scandals that have punctuated his presidency and led to calls within the ANC for him to step down, Financial Times reported.
