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In a broad interview with Eyewitness News on Wednesday, Deputy Finance Minister David Masondo disagreed with experts who questioned why the country was further downgraded.
FILE: Deputy Minister of Finance, David Masondo. Image: @ TreasurySA / Twitter.
JOHANNESBURG – While Deputy Finance Minister David Masondo said the latest downgrades by South Africa’s credit rating agencies were painful, he said it is more important to focus on reforms that would help turn the country’s fortunes around.
In an extensive interview with Eyewitness news On Wednesday, Masondo disagreed with experts who questioned why the country was further degraded.
He said it was a matter of science, with rating agencies simply doing an assessment based on the facts.
Fitch and Moody’s further downgraded South Africa to junk status last week.
Masondo said that while South Africans might have different views regarding the country being further downgraded to garbage, they should appreciate that the rating agencies only dealt with the facts that were presented to them.
“I think we need to separate science and morality, the view that we can have our feelings about their decisions,” Masondo said.
He said that while the government was doing its best to control spending, it remained a worrying issue along with an economy that had no prospects for growth.
• ALSO READ: Mboweni: Fitch & Moody’s Credit Rating Painfully Downgraded
Masondo said that like a bitter pill, recent assessments were due to circumstances beyond the country’s control, including the impact of COVID-19.
“It’s like when you are sick and you cannot go to work and therefore you cannot generate income. Unfortunately, the system works based on whether someone can pay or not, ”he said.
Calling it unfortunate, he said that this was the pain the country had to absorb as it worked to change South Africa’s current challenges.
THE FUTURE OF SAA
At the same time, Masondo said that South Africa needed a national airline, but that it was not a burden on the country’s treasury.
The deputy minister said that a national airline should not need to be constantly rescued.
In recent days, Finance Minister Tito Mboweni has been pushing for South Africans to discuss the matter through his Twitter account.
• READ ALSO: ‘Do we really need a national airline?’ Mboweni endorses tweets about SAA
In October, it announced that South African Airways (SAA) would receive more than R10 billion to implement its business rescue plan.
After years of government bailouts, SAA could continue on that trajectory. And while Mboweni’s questioning of its need has drawn ire from unions, Masondo said a national airline shouldn’t be a burden on the state.
“It has always depended [on the state], has never made a profit. And that’s not the national airline we want, ”Masondo said.
Masondo also touched on the country’s plans towards economic recovery, which he described as sufficient, but said that in some cases there was a rejection of the government’s plans.
“Because some of the reforms threatened certain interests, whether in energy or telecommunications, then there will be resistance from certain actors in those economic sectors,” he said.
He admitted that the pace at which some of the plans were being executed could be much faster.
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