Consequences of being downgraded to junk status: Magda Wierzycka

Lack of capital collapsed the National party in South Africa. Sanctions are exactly that - no capital investment in South Africa, and it brought down that government.

Magda Wierzycka, Chief Executive Officer of Sygnia Group

We cannot underestimate how serious this rating downgrade has been...

Magda Wierzycka, Chief Executive Officer of Sygnia Group

The downgrade of South Africa's credit status to sub-investment grade (junk status) by rating agency Standard & Poor’s (S&P) means we are regarded a bad risk by foreign investors.

This is an analysis by Magda Wierzycka, Chief Executive Officer of Sygnia Group.

As a consequence, any investor who will lend South Africa money will demand a much higher interest rate.

Magda Wierzycka, Chief Executive Officer of Sygnia Group

We need to borrow R149 billion just to make up the gap in government budget.

Magda Wierzycka, Chief Executive Officer of Sygnia Group

This problem is multi-tiered because increasing taxes in an economy that is not growing and there's no job creation means that collective revenue of the country reduces while inflation is going up.

Magda Wierzycka, Chief Executive Officer of Sygnia Group

Everything has a gradual slide down rather than a rapid sharp fall – such as what we saw in 2015 – but now things are almost more serious. We are all frogs in a pot and the water is getting hotter and hotter.

Magda Wierzycka, Chief Executive Officer of Sygnia Group

To hear more of this interview, listen below:


This article first appeared on CapeTalk : Consequences of being downgraded to junk status: Magda Wierzycka


Recommended

by THE NEWSROOM

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
S&P’s fear of ‘budgetary slippage’ by new Finance Ministry moved it to downgrade

S&P’s fear of ‘budgetary slippage’ by new Finance Ministry moved it to downgrade

S&P explains why it downgraded SA's credit rating to junk after an emergency meeting, instead of the scheduled review on 2 June.

What's in a downgrade? Economist Lesiba Mothata explains

What's in a downgrade? Economist Lesiba Mothata explains

Lesiba Mothata says SA's junk rating should not be taken lightly and explains the implications, in light of our trade deficit.

How SA’s reshuffle to ‘junk status’ will affect your pocket

How SA’s reshuffle to ‘junk status’ will affect your pocket

Anxious The Money Show listeners are asking about the effect of the ratings downgrade their finances.

What South Africa’s reshuffle to 'junk status' means for your pension fund

What South Africa’s reshuffle to 'junk status' means for your pension fund

Arabile Gumede (on The Money Show) interviews ZAR-X CEO Etienne Nel.

'We need 50 brave souls in the ANC to vote with their conscience'

'We need 50 brave souls in the ANC to vote with their conscience'

"We know people are scared. They [ANC MPs] need to see that South Africa is behind them," says Sygnia's Magda Wierzycka.

Opinion: The fact of the matter is Gigaba lied, says Redi Tlhabi

Opinion: The fact of the matter is Gigaba lied, says Redi Tlhabi

Finance Min. Malusi Gigaba revealed he knew about S&P's downgrade and Redi Tlhabi says it's a little too late to disclose info.

Opinion: Sir may I say to you there is a leadership crisis now!

Opinion: Sir may I say to you there is a leadership crisis now!

John Maytham responds to Zuma saying he was right to introduce younger blood into Cabinet to prevent a future leadership crisis.

Popular articles
Signal jammers and other devices confiscated at China Mall

Signal jammers and other devices confiscated at China Mall

Several communications devices were confiscated from businesses in a raid by Icasa at China Mall on Wednesday.

Trump confirms his first visit to Africa

Trump confirms his first visit to Africa

United States President Donald Trump has disclosed his first stop on an African visit.

'The university degree is dead'

'The university degree is dead'

Flux Trends founder Dion Chang gives five reasons why he believes getting a degree is past its sell by date.

Meet the founder of Capitec Bank, named ‘Best Bank on Earth and Cheapest in SA’

Meet the founder of Capitec Bank, named ‘Best Bank on Earth and Cheapest in SA’

Michiel le Roux speaks about the fascinating story behind the little bank that has the Big 4 shaking in their boots.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...

5 ways the NSFAS funding model will change in 2017

5 ways the NSFAS funding model will change in 2017

The National Student Financial Aid Scheme (NSFAS) will pilot a new funding model in 2017. NSFAS chairperson Sizwe Nxasana explains.