HSF Briefs

The power to arrest is subject to important safeguards

This brief looks at the electoral task team report and its relevance with regards to the outcomes of the latest local government elections.

This brief looks at the extent of golden handshakes in the public sector and legislation governing financial misconduct.

The first two briefs in this series discussed the views of the rating agencies, Moody’s and Fitch, on the South African economy. This is the final brief in the series.

The first brief in this series discussed the current view of the South African economy held by Moody’s rating agency. The next brief will set out the position of Standard and Poor's.

South Africa is in the middle of controversies relating to the SA Revenue Service, the Hawks, the Minister of Finance, Pravin Gordhan, the National Treasury, and State-Owned Enterprises (SOEs). There are also serious tensions within the government and the ruling party. South African government bonds have lost money for investors as bond yields have increased. This could get worse if the Minister of Finance is to be replaced by someone who is less trusted by investors. There are conflicts between the National Treasury and the SOEs (for instance Eskom, Denel and South African Airways) all of which revolve around the resistance of the Treasury to finance their respective bailouts. The biggest specialist investor in fixed interest in South Africa, Futuregrowth, has taken the decision to suspend financing any new loans to some SOEs, setting conditions for resumption. A Danish Bank (Jyske Bank) has withdrawn financial support from Eskom. Moreover, the IMF reduced its projections of growth in South Africa between April and July 2016, now expecting growth of 0.1% in 2016 and 1.0% in 2017. These recent developments will have an impact on the rating agencies in their next review. In this series of three briefs, one on each rating agency, an account will be given of how agencies evaluated the South African economy in their most recent reviews. Given the deterioration in outlook, there is serious cause for concern about their next reviews.