SA’s determination to buck global trends makes us fear the worst

By Alec Hogg

Researchers from the world’s major ratings agencies – S&P, Moody’s and Fitch – are in South Africa right now. They are asking whether Treasury can keep a lid on state spending; and if long-overdue reforms will be introduced to spark life into a stagnant economy. The answers will determine whether the country’s credit rating drops to junk status, sparking a fresh round of negatives.

During the commodities boom and the subsequent reaction to the Global Finance Crisis, South Africa somehow avoided being punished for being out of step with the world. That luxury is no longer available.  Pretty much everywhere nowadays, policy makers are supporting business, promoting entrepreneurship, hacking at bureaucracy and the public sector’s share of the economy. The Zuma Administration is doing exactly the opposite.

The Free Market Foundation has alerted us to a White Paper which proposes a new State Owned Enterprise to effect control over the ICT sector. Yet another SOE beggars belief so soon after news emerged that the existing ones agreed irregular spending of R46 billion last year.

We hope for the best on the rating. But as with the Springboks against Wales tomorrow, it is hard not to fear the worst.

File photo. South Africa's President and leader of the ruling ANC party Jacob Zuma. REUTERS/Ihsaan Haffejee
File photo. South Africa’s President and leader of the ruling ANC party Jacob Zuma. REUTERS/Ihsaan Haffejee
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