Unpredictability dents SA image

Apart from the government postponing the e-toll system after talks with Cosatu (two days before an interdict was granted to halt e-toll plans), service-delivery protests have led to a change in the budget consolidation process, Lindow said. The National Energy Regulator of SA also changed its decision on electricity hikes, after the president apparently asked it to, she said.

"So protesters are newly empowered and they think this is the way to change government decisions," she said.

Moody's downgraded the credit ratings of the SA National Roads Agency (Sanral) a week after implementation of the e-toll system was halted, saying the delay in e-toll collection puts pressure on Sanral's finances and raises concerns over its medium-term financial sustainability.

Political instability was not cited

Reduced policy predictability and transparency is one of the factors behind the negative outlook Moody's assigned to South Africa's credit rating late last year. Fitch Ratings and Standard & Poor's also assigned a negative outlook to SA's credit rating. The government has criticised the views of ratings agencies, with Finance Minister Pravin Gordhan saying he disagrees with the assessment of political risk in SA.

"Political debate and a vigorous exchange of ideas on policy options are part and parcel of the fibre of a democratic dispensation. This cannot be construed as political instability," Gordhan said in March.

According to Lindow, Moody's has not cited political instability as a driver for the negative outlook, "even though the government has portrayed our decision in such a way".

The ANC's leadership contest at the end of the year is also not considered an element of political instability, she said, as it is part of a natural democratic system.

Source: Business Times via I-Net Bridge