By Linda van Tilburg
- South Africa could fall deeper into junk territory after the Standard & Poor’s Global Ratings agency cut the outlook on its assessment of the nation’s debt to negative, citing slow growth, the upwardly revised fiscal deficit and a growing debt burden. The agency left the rating of BB unchanged, which is two steps below investment grade saying it could be lowered if they were to observe continual fiscal deterioration. The National Treasury said in a response that the government fully recognised the agency’s assessment of the challenges and opportunities which the country faced in the immediate to long-term and remained committed to placing the public finances on a sustainable path while aiming for inclusive economic growth. It said the government reiterated that the growth in the public sector wage bill needed to be addressed in order to reduce the debt burden.
- South African Airways restored a full flight service yesterday. It follows after an agreement was reached in the industrial dispute between the airline and three of its largest unions ending an eight day strike. The parties agreed to a 5.9% increase for the financial year that began in April with the first salary increase in February 2020 and back payments in March and April, but said it would be subject to the availability of funding. SAA also promised to delay talks with unions on job cuts until the end of January. The strike has cost the airline about R50m a day. Earlier this month SAA said it could cut almost 20% of its 5,000 employees. Public Enterprises Minister Pravin Gordhan said the government could provide no more financial support to SAA.
- South Africa is blocking arms sales to Middle Eastern countries, including the United Arab Emirates, Saudi Arabia, Oman and Algeria due to an inspections dispute; a move which the industry has described as a danger to billions of dollars in business and thousands of jobs in the defence sector that is struggling. Reuters reports that the dispute centres around a clause in export documents that require foreign customers not to transfer weapons to third parties and to allow South African officials to inspect their facilities to verify compliance. Denel and Rheinmetal Denel Munitions say the dispute was holding up their exports. RDM said some of its exports to the Middle East had not been approved since March this year. The Aerospace, Maritime and Defence Industries Association of South Africa, AMD told the news agency that one clause was preventing it from exporting R25bn of goods and the dispute was threatening the sector’s survival.
- The state has asked the Pietermaritzburg High Court to avoid further delays so that former President Jacob Zuma can stand trial as soon as possible. This follows after Zuma’s lawyer formally applied for leave to appeal against his application for a permanent stay of prosecution on the criminal charges related to the arms deal. The court is expected to rule on Zuma’s appeal at the end of this week. State prosecutor Andrew Breitenbach also wanted the court to fine Zuma for insulting judicial officers. Breitenbach insisted that Zuma should have his day in court.
- The former New York Mayor Michael Bloomberg has announced he is running for the Democratic Presidential nomination, offering his own mix of moderate policy stances and experience in business, government and philanthropy as a way to beat President Donald Trump. Bloomberg called Trump an existential threat to America and its values. He said if Trump had another term in office, his country would never recover from the damage. Bloomberg reconsidered his earlier decision not to run in 2020 as he saw the Democratic field struggling to produce a front-runner to take on Trump.
- With data expected from several quarters including the Reserve bank’s business cycle indicator and the RMB/BER business confidence index, which could highlight an economy battling to shake off gloom; there was at least one piece of data where South Africa has done exceptionally well. The UK Spectator magazine’s index of female graduates in science, technology, engineering and maths the so-called STEM subjects indicated that South Africa finds itself second on the list, just behind India in the percentage of female graduates in STEM subjects. 42% of students in these graduates are women compared to India who tops the list with 44%. Compare that to the UK’s 38% and Germany’s 27%.
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