Zuma’s reckless reshuffle now threatens Metros ability to deliver
5 April 2017
The DA is deeply concerned to learn that President Jacob Zuma’s self-serving and reckless midnight cabinet reshuffle has now directly threatened the credit ratings of Metros and Local Governments.
That Moodys has placed the Cities of Johannesburg, Ekurhuleni and Cape Town on review for a downgrade of their global scale short-term rating and global scale long-term rating, immediately after Zuma’s reshuffle, shows that the effects of Zuma’s negligence are being immediately and directly felt at the coalface of delivery.
Downgrades, through no fault of the local governments themselves, would mean that the cost of servicing debt will rise, and this will take funds from service delivery and job creation. This directly undermines service delivery, and is a direct effect of Jacob Zuma’s actions. As more money will now be spent on repaying debt, less money will be spent on services and infrastructure.
Moodys said: “Today's rating actions follow the potential weakening of the South African government's credit profile, in particular in the country's institutional, economic and fiscal strength, as captured by Moody's recent decision to place South Africa's Baa2 government bond ratings on review for downgrade.” And added that “protracted political tensions that generate policy uncertainty might put pressure on their overall financial performances.”
As Moodys threatens to downgrade South Africa for the instability created by Zuma’s selfish cabinet manipulation, so it now threatens to send Metro and Local Governments to the same fate.
The threatened downgrades will immediately affect the investor perceptions of these Governments, at a time when investment is sorely needed. It will now be harder for these governments to attract investment, and to negotiate in the debt market; but in the local governments where the DA governs we will continue to pursue investment tirelessly.
The DA has taken over Metro governments across South Africa, and at a time when reversing the ANC-created rot, restoring delivery, and rescuing the finances is of paramount importance, it is deeply regrettable that the cost of servicing debt is now threatened to grow significantly. This will spur our governments to work all out at attracting investment, to fill the gap that Zuma has created.
President Jacob Zuma has dealt a devastating blow to our nation, sent our economy into a downward spiral, and the effects will continue to be felt by especially those who struggle every day to get ahead.
Issued by Kevin Mileham, DA Shadow Minister of COGTA, 5 April 2017