Treasury responds to junk rating

[BusinessTech]

Treasury responds to junk rating

Treasury has responded to Standard & Poor’s (S&P) decision to downgrade South Africa to junk status.

 

[HunterGR]

Treasury said in a statement on Monday evening (3 April) that while the leadership of the finance portfolio has changed, government’s overall policy orientation remains the same.

“As indicated by minister Gigaba on 1 April 2017, ‘government has been, and will remain, committed to a measured fiscal consolidation that stabilises the rise in public debt’.”

“South Africa is committed to a predictable and consistent policy framework, which responds to changing circumstances in a measured and transparent fashion,” the government department said.

“Open debate in a democratic society should not be a cause for concern, but reflects an important means to accommodate differing views.

“South Africa’s constitutional arrangements remain robust. These key institutional strengths are acknowledged by rating agencies.

“This rating announcement calls for South Africans to reflect on the need to sustain and act with urgency to accelerate inclusive growth and development so that we can reverse the triple challenge of poverty, unemployment and inequality.

“Reducing reliance on foreign savings to fund investment and relying less on debt to finance public expenditure will secure South Africa’s fiscal sovereignty and economic independence,” the Treasury said.

Extra big spade was needed to shovel that BS they just spewed.......

 

[Foxhound5366]

Wow, the spokesperson at Treasury really whipped out every positive word possible ... and even strung it together into something that almost sounds like a real sentence.

Not so sure about the robust constitutional arrangements part though, when old Zuma just recently also was quoted as saying that the ANC would have to change the constitution so that land repossessions can be deemed legal (he doesn't see to spot the irony in his own words).

 

[chrisc]

If SA has junk status, how are they going to raise the trillions of Rand to build a nuclear power plant (that we don't need anyway)?

 

[Foxhound5366]

If SA has junk status, how are they going to raise the trillions of Rand to build a nuclear power plant (that we don't need anyway)?

Raise? Who ever said anything about raise? Russia will give it to us as a loan, of course ... they don't care about the capitalist credit ratings, there is plenty of oil money flowing around for a few speculative investments in rapidly third-world countries. There will be signing bonuses all around, and never mind the future.

 

[Swa]

Treasury said in a statement on Monday evening (3 April) that while the leadership of the finance portfolio has changed, government’s overall policy orientation remains the same.

Haha

“This rating announcement calls for South Africans to reflect on the need to sustain and act with urgency to accelerate inclusive growth and development so that we can reverse the triple challenge of poverty, unemployment and inequality.

Government still seriously out of touch with where the real problems in this country lie. Must have taken some seriously thinking to spin this into a positive, even forgot literally half the closing quotes.

 

[Foxhound5366]

Urgh, that's about as a creative as a child's crayon drawing on a wall. "This rating announcement" calls for South Africans to reflect on the need to sustain and act with urgency to accelerate political change in this country.

 

[Johnatan56]

Raise? Who ever said anything about raise? Russia will give it to us as a loan, of course ... they don't care about the capitalist credit ratings, there is plenty of oil money flowing around for a few speculative investments in rapidly third-world countries. There will be signing bonuses all around, and never mind the future.

Lol, it first has to recover fully.

The World Bank is predicting 1.5 percent growth in Russia’s gross domestic product in 2017 and sees a gain of 1.7 percent in 2018 and 1.8 percent the following year, helped by increases in commodity prices.
Russia’s projected GDP growth follows an estimated 0.6 percent contraction in 2016 and a 3.7 percent contraction in 2015.
http://www.rferl.org/a/28225129.html

Say 100% in 2014, 96.3% in 2015, 95.7222% in 2016, 97.158033% in 2017.
That's not taking into account that the entire world's economy grew in that time and therefore the relative value of the GDP has also decreased.

It's also struggling with cash reserves, but this article is before the oil price increased back to the $50/barrel mark.

After almost two years in recession, the country's rainy day fund has shrunk to just $32.2 billion this month, according to the Russian Finance Ministry. It was $91.7 billion in September 2014, just before oil prices started to collapse.

And it's getting worse. Analysts expect the fund will shrink to just $15 billion by the end of this year and dry up completely soon after that.

"At the current rate, the fund would be depleted in mid-2017, perhaps a few months later," Ondrej Schneider, chief economist at the Institute of International Finance, wrote in a note this week.
...
Russia's 2016 budget is based on the assumption the country would be able to sell its oil for $50 per barrel.

But the average oil price in the first eight months of the year was less than $43 per barrel. Oil now makes up just 37% of all government revenues, compared to roughly 50% just two years ago.
http://money.cnn.com/2016/09/16/news/economy/russia-cash-reserves-depleted/

EDIT:
They need $55/barrel to build reserves: http://www.reuters.com/article/us-russia-budget-reserves-idUSKBN15327Q

Russia is considering a new budget rule that would keep the rouble weak and mean its depleted fiscal buffers start recovering at a Urals crude price of $55, finance ministry documents seen by Reuters showed on Thursday.

Russia wants to avoid fully depleting its battered fiscal reserves, which have been used to plug holes in the budget since its economy entered a deep slump following the collapse in global oil prices from mid-2014.

It's still under 50: http://www.topoilnews.com/

Oh and do note some of the reserves are things like shares in government owned companies.