After months of investigations, prosecutors on Tuesday summoned Gordhan to appear in court on November 2 on charges of fraud over his approval of the early retirement and subsequent reappointment on a contract basis of a former colleague.
That resulted in “fruitless” expenditure of R1.1m, they said. They’re also probing allegations that Gordhan oversaw the establishment of an illicit investigation unit when he was commissioner of the South African Revenue Service. Gordhan says the charges are baseless and politically motivated.
S&P and Fitch Ratings both have South Africa’s credit rating at BBB- with a negative outlook, which is one notch above junk status. Moody's rating is slightly better at Baa2 with negative outlook. S&P is set to deliver its next ratings review on December 2.
Manuel, whose term as finance minister ended in 2009, said the decision to prosecute was reckless and a ratings downgrade had already been priced into South African assets.
“In many respects my sense is that the die is cast,” Manuel said in a speech in Johannesburg.
“When the country gets downgraded to below investment grade, the people who pay the price are the poor because there’s less money available to deliver public service.
“It’s people who are more dependent on the state for their very existence who actually pay the price of the carelessness of some.”
SA must stick to fiscal targets set in February budget - S&P
South Africa needs to stick to its fiscal targets set in the budget if February if it is to retain its investment grade credit rating, Standard & Poor’s (S&P) Global Ratings said on Thursday.
“What has changed in South Africa is that political tension, political turmoil has come to the fore,” Konrad Reuss, S&P’s managing director for Sub-Saharan Africa, said at the Thomson Reuters Africa conference in Cape Town on Thursday.
“I’m tempted to say that is a game changer compared to 10 years ago. We would be concerned if the current fiscal position is undermined. We want to see the minister and his team stick to the fiscal targets.”
Reuss said S&P would also take into account risks arising from South Africa’s lacklustre growth when making its assessment. The country faced significant spending pressures, the trend line of its debt was going in the wrong direction and state-owned companies posed a risk to the fiscus, he said.
Deputy Finance Minister Mcebisi Jonas will accompany President Jacob Zuma to the Brics summit in India this weekend along with six other cabinet ministers, the president’s office said in a statement on Thursday.