>> Markets in South Africa tumbling on Tuesday. A reaction to S&P cutting the country's credit rating to junk. It says President Zuma's dismissal of his respected finance minister signaled a damaging policy shift prompting a sell loff in South African assets, the rand, bonds and banking shares all falling.
It's the country's first down grade since 2000. Reuter's is in Johannesburg.>> Timing of the ratings down grade is very significant. The last time South Africa was on the brink of credit down grades, after President Jacob Zuma changed finance ministers twice in three days. The country was only given a reprieve because the rating agencies felt they could trust Standard and Poor's didn't waste any time in cutting South Africa's downgrade to junk after Gordhan was removed last Monday.
And now the two other agencies are very likely to follow.>> Pressure, now likely to mount on President Zuma, his covenant reshuffle provoked widespread public criticism from within his ruling African National Congress, threatening to split the upper echelons of the party. President Jacob Zuma is facing a huge backlash from inside his party.
The Deputy President as well as two other members of the ANC's top leadership have publically criticized his decision to remove Pravin Gordhan as Finance Minister. That is unprecedented. And the ANC's two main allies have also called for Zuma to step down. So politically there is going to be a lot of uncertainty going forward.
New finance minister, Malusi Gigaba says he'll maintain Pretoria's current fiscal stance, and pursue tough and unpopular choices to oversee a redistribution of wealth to the black majority. The downgrading will almost certainly lead to a rise in government debt-servicing costs. That'll mean less money for critical services, like housing Education and sanitation.
A potential catalyst for even more protests like those that have all ready rocked towns across the country.