Consulting Engineers South Africa (CESA) has noted Standard and Poor’s (S&P) decision to downgrade South Africa’s long term foreign currency credit rating to BBB from BBB+ and the long term local currency credit rating to A- from A.

S&P has maintained the negative credit outlook on the rating.

CESA Graham Pirie, CEO commented: “The downgrading by Moody’s of South Africa will increase the cost of doing business and as a consequence may also impede the government infrastructure programme so necessary for creating economic growth and an enabling environment for business to flourish.”

Recent strikes in the mining sector were likely to feature in political debates in the run up to the 2014 general elections and thereby increasing policy uncertainty as well as weaker business and investment climate which may weigh on South Africa’s economic growth prospects, have been cited as some of the factors that have influenced the decision for the downgrade.

Pirie added that this will also have an impact to CESA member firms, in their quest to improve the living conditions of the people of South Africa in terms of meeting some of the service delivery imperatives of the National Development Plan.

The National Treasury said in its response that while there are risks to growth, its fiscal framework continues to be guided by the three principles, namely: counter cyclicality, debt sustainability, and intergenerational equity.