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Dark clouds gathering

- Wits University

Tito Mboweni warns against inconsistent policies.

Former Reserve Bank Governor, Mr Tito Mboweni says South Africa needs an “immediate defence mechanism” to avoid being awarded a “junk” rating by international credit ranking agencies.

Speaking at the Wits graduation ceremony of the Faculty of Commerce, Law and Management on Tuesday morning, Mboweni warned that “a dark cloud, mist or fog is gathering upon us as a country”.

“We have just become one notch above junk status. We cannot afford to become junk status,” said Mboweni.

“Junk status as we know translates automatically to cost of borrowing, re-ordering of corporates on the investor’s horizon within his or her rules or within certain indices like the MSCI. The immediate defense mechanism is based on three pillars: a credible fiscal stance (we dare not deviate from the Budget stance we adopted in October, please!); re-enforce central bank independence (I know this is intangible, but let’s do it!); and finally, respect for all other independent institutions (the judiciary and chapter nine institutions).”

Mboweni said South Africa also has to demonstrate that it is serious about economic growth and taking serious steps to propel it.

Mboweni served as the South African Reserve Bank Governor from 1999 to 2009, and as the Minister of Labour in former President Nelson Mandela’s Cabinet. He is also a member of the National Executive Committee (NEC) of the ANC and serves as a non-executive director of the new Development Bank (Brics Bank). He joined Wits in August this year as an honorary professor at the School of Economic and Business Sciences.