Rating Agencies ‘Getting Us Wrong’: South Africa
Rating agencies are wrong to be concerned about South Africa, the country's finance minister told CNBC at the World Economic Forum on Wednesday, arguing that the country has its finances under control.
Responding to Fitch's recent downgrade of the South African credit rating to BBB , South African Finance Minister Pravin Gordhan told CNBC the rating agencies were "getting us wrong" .
Debt level concerns were unfounded as the government is aiming for a 41 percent debt/GDP ratio in the next two years, he said. He added that there should be no concerns about political uncertainty as a recent party conference had just provided clarity for the next seven years. A national development plan will be implemented soon, he said.
Most importantly, Gordhan pointed out that the ANC had clarified its policy with regards to the mining sector, saying there would be "absolutely no wholesale nationalization in the mining sector" . He did concede though that "like Chile or Norway, the South African government has interest in promoting sectors in the mining industry and taking a stake in it, but investors should view it more like a PPP (public private partnership)".
However, the language from other members of the government is more hostile.
Gwede Mantashe, secretary general of the ANC, this week accused British mining giant Anglo American of "stealing" South Africa's money, adding that the country needed to take "bigger interest and control" of its mines.
Mining giant Anglo American recently announced it is reviewing 14,000 jobs in the country as part of its Amplats platinum operations there. The mining sector accounts for 6 percent of South Africa's economy.
For six months, Africa's biggest economy has been dogged by labor disputes that swept across the platinum industry and spread to the farming and trucking industry. The South African rand fell to a three year low in October, but has recently stabilized, especially after the ANC's leadership conference in December. On Wednesday the rand fell back to a seven-week low against the dollar as data released showed inflation had still not reached the 6 percent target set by the central bank.
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Despite the numerous headwinds, Gordhan is optimistic aboutgrowth in 2013. "Labor disputes have had a slight dent on growth, but manyother factors like global growth concerns have contributed, as well. We live inan exciting neighborhood with huge linkages between Africa and the continentand we are working on repairing the deficiencies in the labor relations andcollective bargaining. "
"We hope that in four to six weeks, we will have greaterlabor relation reform for the farming and platinum sector, which have laggedthose in gold and coal in terms of labor relations," he said.
Gordhan told CNBC that the labor disputes have not had animpact on foreign direct investment and overall business sentiment.
On Wednesday, unions confirmed that they ended the latestthree week deadly farm strike in South Africa's wine growing WesternCape.