CAPE TOWN, April 9 (Xinhua) -- The downgrade of South Africa's credit rating provides a clear signal that the country is going to have to pull together like never before to overcome its economic problems, the ruling African National Congress (ANC) said on Sunday.
A credit rating, being a measure of how likely the country will be able to repay its loans in full, is not an unimportant indicator of the state of the economy, the party said in a statement emailed to Xinhua.
SA's credit rating were downgraded to junk status by international rating agencies Standard & Poor's and Fitch on April 3 and April 7 respectively.
Both agencies cited political instability as one of the reasons for the downgrade.
A deterioration in SA's credit rating will have a major negative impact on the country's ability to raise debt funding to fund its development programs, particularly at a time when domestic savings are at a low level, the ANC said.
The ANC achieved an investment grade status after it took over a fully junk status in 1994 when apartheid was brought to an end. The achievement is seen as one of the greatest successes of the ANC-led government.
The ANC needs to mobilize collective action by all South Africans; in the private sector, labour and in government to do everything necessary to bring the country back to investment grade, said Enoch Godongwana, Chairperson of the ANC National Executive Council (NEC) Subcommittee on Economic Transformation.
"The essential messages that were conveyed by the rating agencies were that we need to deal with the structural challenges of the South African economy, including dealing with sluggish growth.
"Secondly, we need to deal with concerns around contingent liabilities from SOEs (state-owned enterprises), which threaten the state balance sheet and by extension the financial stability of the nation," he said.
The other message from these agencies is that the most recent reshuffle has sent a signal of political instability and policy uncertainty, Godongwana said.
The reshuffle, effected by President Jacob Zuma on March 31, saw 20 ministers and deputy ministers being sacked or replaced, including Finance Minister Pravin Gordhan. The move shocked the financial market, sending the rand plummeting against the dollar by about 10 percent in several days.
The ANC will convene an economic round-table conference with all key stakeholders to discuss substantial issues affecting the economy, particularly aimed at achieving the objective of lifting investment levels to 30 percent of GDP, according to Godongwana.
But the date for the conference has not been set.
"We need a renewed focus on growth enhancing policies required to reverse South Africa's economic fortunes. Growth is critical to raising the potential for socio-economic development within the country," Godongwana said.