Finance Minister Pravin Gordhan gestures during a media briefing in Sandton in March. Picture: REUTERS
Finance Minister Pravin Gordhan gestures during a media briefing in Sandton in March. Picture: REUTERS

SA HAD three months in which to convince ratings agencies and investors of its fiscal stability; that concrete steps will be taken to deal with problems in state-owned companies; and to boost economic growth to rebuild confidence among investors, Finance Minister Pravin Gordhan said on Monday.

He reiterated the concerns raised after meeting more than 250 investors — with about R600bn in exposure to SA equities and bonds — during road shows in London, Boston and New York.

SA had to prove its resilience, Mr Gordhan said.

This week, ratings agency Moody’s is in SA for a review after putting SA on notice for a downgrade.

But Mr Gordhan said he had constructive discussions with ratings agencies and one even put off its review meeting from after the budget to June.

While road shows are a common feature, this one had more urgency as it came after the firing of former finance minister Nhlanhla Nene, the likelihood of a credit rating downgrade, and slowing economic growth.

"We need to provide very concrete evidence over the next few months that we are not just talking, and we are not just delivering new plans and new proposals. It’s time for collective action, concrete action and demonstrable action (to) which the world can say, yes, we believe these guys," Mr Gordhan said.

The rand fell as much as 2.4% against the dollar in generally risk-averse trade on Monday, weighed down by worries that a credit rating downgrade could be looming. At R15.59/$ — its softest in more than a week — the currency was down 2.3%, before recovering slightly to R15.57/$ in late afternoon trade.

Moody’s is in the country from Wednesday to assess whether SA is able to tackle its myriad economic problems.

"We are in a crisis stage. The downgrade will push us even further into recession," Business Unity SA president Jabu Mabuza said. Solutions to SA’s woes lay in strong partnerships between the government, business and labour to resolve them.

The meeting with investors indicated that the world was watching SA very carefully, Mr Gordhan said.

A downgrade by Moody’s will bring its credit rating in line with that of Fitch and Standard & Poor’s, who rate SA a level above sub-investment grade.

Although global developments were important for SA, local leaders had to take responsibility for SA’s economy, Mr Gordhan said.

"We’ve got to use the resources we have in order to generate confidence amongst our own investors," he said.

The fact that investors wanted to know what concrete action was being taken to tackle the economy’s challenges "tells us something about the global awareness about our economy … and the credibility that we’ve got to win back as a society and an economy".

Strikes also featured high on the list of worries.

National Council of Trade Unions (Nactu) president Joseph Maqhekeni said improving labour relations at the the place of employment was a start towards avoiding strikes.

Mr Gordhan said the government had shown "a great deal of fiscal discipline" in the past 20 years and it aimed to continue doing so. Investors wanted to know when the Mineral and Petroleum Resources Development Act Amendment Bill would be processed by Parliament.

Timelines were needed to show a greater deal of urgency, and to begin to show that we were dealing with them, and give some certainty to the investment world, he said.

Small state-owned entities were to be rationalised, while the governance, financial and management problems at larger ones were to be attended to, the minister said.

With Reuters