South Africa’s crusade against losing its investment grade credit rating just got harder. When I spoke to him a couple hours after Wednesday’s Budget speech, Nomura’s Peter Attard Montalto suggested that Treasury had been aiming at the wrong target. While he applauded the fiscal consolidation, London’s top analyst on SA opined that the real issue bothering ratings agencies is the lack of economic growth. And that, they believe, stems from structural issues that need urgent reform – but ones the ruling political party will not or cannot address. Montalto was looking for a Rubicon moment, expecting the unfireable Finance Minister Pravin Gordhan to “pull a rabbit out the hat”. He didn’t. So the ratings agencies, led by S&P, remain on course for a downgrade to junk, probably at the end of the 2016. It says much about the drift of the past seven years that many inside South Africa believe Gordhan pushed the envelope beyond expectations and are sceptical that he can deliver on promises that, clearly, are not enough to move the ratings needle. – Alec Hogg

By Matthew le Cordeur

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