Rising social pressures are increasingly throwing South African policymakers off track, a senior analyst at Moody's said.

Rising social pressures are increasingly throwing South African policymakers off track, undermining the predictability of economic decision-making and threatening the country's credit rating, a senior analyst at Moody's said on Wednesday.

Along with peers Fitch and S&P, the ratings agency has downgraded the outlook on South Africa's rating to negative from stable over the last six months, citing the threat of political interference in policy-making.

“There are increased social pressures on the government that have caused policy makers to be kind of thrown off their medium strategy, things like the tolling saga ... and the decrease in the tariff increases for (power utility) Eskom's electricity rates,” Moody's analyst Kristin Lindow said.

President Jacob Zuma's ANC government has been forced to postpone the start of tolling on highways in its commercial hub of Gauteng province after a civic group challenged the move in court, saying the proposed fees were too costly.

In another sign of social pressure swaying policy, the energy regulator in March cut the increase in power rates for state-owned Eskom to 16 percent for the 2012/13 financial year from a previously approved 25.9 percent to protect consumers.

If the road toll plans fall through, the government would be forced to honour its guarantee on 20 billion rand ($2.42 billion) of debt incurred by road agency SANRAL to revamp Gauteng's highways - far above 5.6 billion rand budgeted in February.

“Policy predictability is an important element in our ratings assessment and these kinds of disruptions have been better incorporated into the long term strategy,” Lindow told Reuters on the sidelines of a Moody's conference.

“We haven't found the government being caught off guard in this way as we are now seeing. These kinds of sudden changes are interrupting plans and it is that change in policy predictability that's bad.”

Assuming SANRAL's debt would force the government to increase borrowing, swelling its net debt beyond the 1.35 trillion rand or 36 percent of GDP forecast for the end of 2012/2013.

“A continued growth of state debt and continued growth in guarantees and increased likelihood of those guarantees coming onto the government's own balance sheet would be a negative,” Lindow told the Moody's conference.

“So would be further signs that populism is driving macro policy decisions.” - Reuters

Greeks are voting with their wallets and pulling euros out of the banks in fear that their country may leave the European single currency despite the declared determination of EU powers Germany and France to keep Athens in the monetary union.

Greeks are voting with their wallets and pulling euros out of the banks in fear that their country may leave the European single currency despite the declared determination of EU powers Germany and France to keep Athens in the monetary union.

As financial markets shuddered over the deepening turmoil in Athens on Wednesday, a chorus of sceptical politicians and central bankers from London to Ottawa predicted the euro zone could fall apart soon unless European governments act more decisively to save the currency.

“It either has to make up or it is looking at a potential break-up,” British Prime Minister David Cameron told parliament in London. “That is the choice they have to make, and it is a choice they cannot long put off.”

Greek President Karolos Papoulias warned political leaders that citizens were withdrawing their money due to “great fear that could develop into panic” at the risk of a debt default and exit from the euro area, according to minutes of their meetings posted on the presidency's website.

The president, who tried in vain to broker a national unity government, appointed a senior judge, Panagiotis Pikrammenos, as caretaker prime minister on Wednesday until a second general election in just over a month is held on June 17.

The failure of Papoulias' talks to avert a repeat election sent judders around financial markets, hitting global share prices and other riskier assets.

Investors fled to the US dollar and safe-haven German bonds while the euro lost almost a cent to fall to a four-month low below $1.27. Spanish and Italian bond yields spiked while a key index of European shares fell to its lowest level this year.

German Chancellor Angela Merkel and new French President Francois Hollande sought to quell talk of a possible Greek departure from the euro zone after their first meeting on Tuesday evening, which focused on ways out of the 17-nation currency area's debt crisis.

“We agreed that we want Greece to stay in the euro,” Merkel told a joint news conference in Berlin, adding that Athens must respect the conditions set in a second international bailout agreement signed in March.

CONSEQUENCES

Nearly two thirds of Greeks voted on May 6 for parties of the radical left and far right which oppose the terms of the EU/IMF assistance programme, which has imposed steep wage and pension cuts, deepening a four-year recession.

Policymakers from European Union states and the European Central Bank have warned they would stop sending Athens the cash it needs to stay afloat if a new government tears up the plan.

European Commission chief Jose Manuel Barroso said the Greek people must now make a fully informed decision understanding the consequences for their country's future.

“The ultimate resolve to stay in the euro area must come from Greece itself,” Barroso told a news conference.

But many Greek voters believe they can stay in the euro without abiding by the conditions imposed to obtain the bailouts, as promised by Alexis Tsipras, the charismatic 37-year-old leader of the surging leftist SYRIZA party.

A second opinion poll showed that SYRIZA, which opposes the austerity conditions attached to the assistance programme, is consolidating gains and is on track to become the biggest group in parliament in a re-run vote, pulling ahead of mainstream pro-bailout centre-left and centre-right parties.

The determination to keep Greece in the euro spelled out by Merkel and Hollande may be undermined by sniping from several EU finance ministers, including Germany's own Wolfgang Schaeuble, who have publicly envisaged a possible Greek exit.

Merkel's office complained to Austria after Finance Minister Maria Fekter suggested this week that Greece could be thrown out of the EU as a result of its economic crisis, the newspaper Oesterreich reported.

ALARM

International Monetary Fund chief Christine Lagarde said on Tuesday that Greece would either have to be given more time and money to meet its debt reduction targets or else euro zone countries would have to begin planning for its exit.

Spanish Prime Minister Mariano Rajoy voiced the alarm of a country that could be next in the firing line if Greece left.

“I don't want Greece to exit the euro,” he told parliament in Madrid, as Spain's risk premium over benchmark German 10-year bonds rose to more than 5 percentage points, a euro era high.

“I believe it would be a major error, it would be bad news and I believe we have to guarantee the sustainability of public debt and then all of us comply with our commitments, which is what we are doing in Spain, what Italy is trying to do and what all the other countries are also trying to do.”

In a blow to Rajoy's efforts to clean up Spain's debt-laden financial sector, shares in recently nationalised lender Bankia tumbled 10 percent on Wednesday after it delayed first quarter results, raising fears that the government will have to inject more cash.

Bankia lies at the core of concerns about Spanish banks' problems after a 2008 property crash. Many analysts believe Madrid or the EU will have to inject funds to avert a collapse of the financial system, worsening the euro zone debt crisis.

Italian Prime Minister Mario Monti, whose heavily indebted country is also in markets' sights despite economic reforms praised by the IMF, said that US President Barack Obama was seriously concerned about the euro zone situation, which will be on the agenda of a G8 summit in Camp David at the weekend.

Obama spoke to Monti on Tuesday and the White House said they agreed on the need to intensify efforts to revive economic growth and job creation in Europe, apparently siding with Hollande in his drive to temper German-led austerity policies.

Among the sceptical chorus, Canadian Finance Minister Jim Flaherty, a frequent scourge of the euro zone, said this week that Europeans should abandon the single currency if they were not willing to do more to assist member states in trouble.

“They have to do the right thing, use some of their taxpayers' money to bail out some of the weaker members of the euro zone - or start moving away from the euro zone and just say this was an experiment that has not worked,” he told CTV television.

Bank of England governor Mervyn King told a news conference in London that the euro zone, which Britain refused to join, was “tearing itself apart without any obvious solution”.

“Whatever happens, there are major problems ahead, there are credit losses to be realised and however they choose a solution here, it is going to be a very difficult path to go through because countries like Germany and the Netherlands have yet to face up to their rebalancing,” King said. - Reuters

A projects register is being established by the Construction Industry Board to help monitor progress on government's infrastructure build, says Minister in the Presidency Collins Chabane.

A projects register is being established by the Construction Industry Board to help monitor progress on government's infrastructure build, says Minister in the Presidency Collins Chabane.

Chabane, who is responsible for the monitoring and evaluation of government and its programmes said this when presenting his budget vote speech on Wednesday.

He said his department had been working closely with the Presidential Infrastructure Coordination Committee that was originally created to oversee the overall build programme.

“We have also been working with National Treasury and the Construction Industry Development Board to put in place a mechanism to monitor progress with infrastructure projects at all levels of government,” Chabane said.

He said his department had also been focusing on monitoring the implementation of the Economic Infrastructure Delivery Agreement.

“Our monitoring indicates that much progress has been made, but that more attention needs to be paid to areas such as the acceleration of the electrification programme, increasing demand-side energy savings and improving the maintenance of municipal electricity distribution infrastructure,” Chabane said.

He said that improvements in productivity were required at the ports. - I-Net Bridge

The volatile rand was marginally firmer in afternoon trade after Greek fears were allayed.

The volatile rand was marginally firmer in afternoon trade after Greek fears were allayed as a result of a pledge made by the European Central Bank to support the country ahead of the new June poll.

The discussions over the formation of a Greek government broke down after only nine days and the consequent risk-off sentiment weighed heavily on the rand and emerging market currencies, until the ECB rescue announcement.

“The rand strengthened on news that the ECB will support Greece. It remains vulnerable, but some of the fears have been allayed ahead of the June 17 elections in that country,” a local trader said.

At 15:30 local time the rand was bid at R8.3090 to the dollar from Tuesday's close of 8.3275 and Monday's close of R8.1983. Just a week ago the rand was below R8 per dollar. It was bid at R10.5841 to the euro from R10.5955 before, and at R13.2483 against sterling from R13.3041 previously.

The euro was bid at US$1.2738 from Tuesday's close of $1.2732 and Monday's close of $1.2828.

Dow Jones Newswires reported the European Central Bank wanted Greece to remain in the euro zone, while the decision for Greece's possible exit from the currency union was not an issue that the ECB would need to decide on, according to ECB President Mario Draghi on Wednesday.

“While the ECB will continue to comply with the mandate of keeping price stability over the medium term in line with treaty provisions and preserving the integrity of our balance sheet, I want to state that our strong preference is that Greece will continue to stay in the euro area,” Draghi said at a conference in honour of executive board member Jose Gonzalez-Paramo, whose eight-year term will expire at the end of May.

As recent parliamentary elections have been inconclusive in Greece, worries have been mounting that it may leave the euro zone. “Since the treaty doesn't foresee anything on exit, this is not a matter for the ECB to decide,” Draghi said. - I-Net Bridge

The Indian rupee slumped to a record low against the dollar.

The Indian rupee slumped to a record low against the dollar on Wednesday as the global risk aversion added pressure on a currency already under fire from the country's current account and fiscal deficits.

The rupee, the worst performing emerging market currency in Asia since March 1, is facing further losses as India struggles with a slew of additional economic challenges, including sliding growth.

Investors are also showing little faith in the government's ability to meet its fiscal targets and solve its economic challenges, critical stumbling blocks for a country that needs the capital to shore up its twin deficits.

Finance Minister Pranab Mukherjee pledged on Wednesday to take action to boost “fiscal consolidation”, but said no measures had been worked out, reinforcing these market concerns.

The worries about India's outlook are overwhelming the Reserve Bank of India's ability to defend the local currency, despite repeated interventions and a rash of other measures targeting deposits and exporters.

“It is very hard for the central bank to turn the currency around,” said Robert Prior-Wandesforde, an economist for Credit Suisse in Singapore.

“Without doubt, the investors are looking for steps from the government in terms of structural reforms, be it in the form of news on goods and services tax or the direct tax code or some measures that might encourage infrastructure investments.”

The rupee fell to a record low of 54.52 to the dollar, well below its previous record low of 54.30 hit in December.

Analysts expect the rupee, which ended trade at 54.51, to remain under pressure, given the continued concerns that Greece may pull out of the euro zone and the challenges at home.

A Reuters poll on Tuesday showed analysts expect the rupee to hover near record lows against the dollar for the next month or so, despite already falling nearly 10 percent since its 2012 peak in February.

“Unfortunately for the rupee, this is not a great environment to run a current account deficit and thus be reliant on capital inflows from foreign lenders,” said Sean Callow, a senior currency strategist at Westpac Banking Corp in Sydney.

“I suspect only radical steps by RBI - or sudden action by foreign central banks and/or G20 - will stop a push through 55 and quite possible higher,” he said, referring to the dollar/rupee exchange rate.

ANALYSTS BLAME THE BUDGET

Many analysts blame the start of the rupee's fall on the federal budget for fiscal 2013 unveiled in mid-March, which proposed a deficit target of 5.1 percent of gross domestic product that generated market skepticism.

The government also included a controversial set of taxation proposals for foreign investors.

Capital flows into Indian debt and equities turned negative in April, with a net $926.8 million leaving the country, down from a peak of $7.2 billion in net purchases in February.

Mukherjee's promise of austerity measures on Wednesday failed to convince investors, especially as policy making is expected to stall in the run-up to general elections in 2014.

“The government has been only talking about fiscal consolidation but there are no steps at all, nothing being done to reduce the fiscal deficit,” said Rupa Rege Nitsure, chief economist at Bank of Baroda.

The RBI thus faces a steep battle in defending the currency, even as a weaker rupee threatens to push up inflation, though traders say they do not rule out more aggressive actions.

“The RBI is aware of the situation. We have taken steps and will take further steps if necessary,” said RBI deputy governor H.R. Khan at the sidelines of a summit of South Asian Association for Regional Cooperation in Nepal.

Liquidity would be a concern, though the central bank is expected to step up bond purchases via open market operations should it sell dollars more aggressively in markets. - Reuters

Tanzania's gold production rose to 40.4 tonnes in 2011 from 35.6 tonnes a year ago.

Tanzania's gold production rose to 40.4 tonnes in 2011 from 35.6 tonnes a year ago after mining companies invested in higher output due to cash in on the rising price of the precious metal, its central bank said on Tuesday.

The east African state, Africa's fourth largest gold miner behind South Africa, Ghana and Mali, said exports earnings surged 47 percent to $2.226 billion from gold exports last year, helped by higher output and world market prices.

“The price of gold went up by 28 percent to $1,568 per troy ounce and the export volume increased to 40.4 tonnes from 35.6 tonnes recorded in 2010,” the central Bank of Tanzania said in a report on its website.

Gold, Tanzania's biggest foreign exchange earner, accounted for 59.1 percent of the country's total non-traditional exports last year.

“Gold and other precious metals including diamond and tanzanite are the major exports to Switzerland, China and South Africa,” said the central bank.

Tanzania plans to increase the contribution of the mining sector to gross domestic product (GDP) to 10 percent by 2025 from 3.8 percent last year.

African Barrick Gold said on Wednesday it will pay the Tanzanian government an additional one percent in royalty, citing the current gold price environment.

Other major gold producers in Tanzania include Anglogold Ashanti Ltd, which owns the Geita gold mine, and Resolute Tanzania Ltd, which owns the Golden Pride mine.

Large-scale gold mines have invested around $3 billion in Tanzania over the past decade, according to government estimates. - Reuters

South African stocks turn positive as investors chase bargains after the benchmark index hit a four-month low earlier with Richemont the top gainer following an above-forecast full-year net profit.

South African stocks turn positive as investors chase bargains after the benchmark index hit a four-month low earlier with Richemont the top gainer following an above-forecast full-year net profit.

The JSE Top-40 index is up 0.5 percent, recouping all the losses after slumping by as much as 1.59 percent earlier. The broader All-share index adds 0.4 percent to 33,655.18 points.

“There was a lot of capitulation this morning. There was sudden rush into cash and into safe haven assets but fundamental values did show themselves and smart money buyers came in at the lower levels and picked this market up,” says Deryck Janse van Rensburg, a trader at BJM Private Clients.

Richemont, the biggest percentage gainer on the exchange, is up 8.9 percent at 51.35 rand. Retailers Truworths, Mr Price and Steinhoff all gain between 1.3 and 3 percent.

Official data showed that retail sales grew to 6.8 percent year-on-year in March, above an average of 6.6 percent economists polled by Reuters had expected. - Reuters

Impala Platinum's chief executive-in-waiting Terence Goodlace has plenty of experience operating in tough places, such as Democratic Republic of Congo.

Impala Platinum's chief executive-in-waiting Terence Goodlace has plenty of experience operating in tough places, such as Democratic Republic of Congo.

He will need it because running the world's second-largest platinum producer, which he takes over from July 1, is not for the faint of heart.

Tags or Goodis, as he is known by his closest friends, has been welcomed as a strong replacement for David Brown, who may welcome the break from the operational and political nightmares of the few last months.

Goodlace has shown his mettle running copper and cobalt producer Metorex, which has operations in Zambia and the rough business environment of Congo.

“He comes with a good reputation ... at Metorex he was the grown up sent in to clean up the mess. They had gone on a string of absurd acquitisions and the capital development at the mine in the Congo spiraled out of control,” said Paul Theron, an analyst at Johannesburg-based Vestact.

After leading an 18-month turnaround of the mid-tiered base metals company, it became the target of a bidding war between Brazilian resources giant Vale and China's Jinchuan Group, the world's largest cobalt producer.

Jinchuan finally clinched it with a 9.1 billion rand offer.

“He's a safe pair of hands,” said Theron.

Implats certainly presents a challenge.

The company started the year having to douse fires at its Rustenburg Lease Area after more than 17,000 workers at the world's largest platinum operations refused to return to work.

Discontent over bonuses paid to only part of the workforce quickly escalated into a union turf war and a violent six-week illegal strike that claimed three lives.

Implats lost 120,000 ounces of production and about 2.4 billion rand ($290.15 million) in revenue, and the surrounding community lost around 2,000 jobs.

Analysts also warned that unsettled labour grievances and simmering tensions between the established National Union of Mineworkers and the Association of Mineworkers and Construction Union could still explode.

Then there is Zimbabwe.

Goodlace will likely have to complete the delicate deal Implats' Zimbabwean unit Zimplats struck with the government to ensure that it complies with empowerment laws.

Zimbabwe wants at least 51 percent of all foreign-owned companies to be held by locals and mining companies have been pressured to set the example.

Resource nationalism has been growing across Africa as countries wake up to the value of their resources and the need to give their populations a bigger cut of the commodities pie.

After months of wrangling and threats that the government would “take measures” to enforce the law, Implats reached an agreement with the Zimbabwean government in mid-March.

Zimplats, which is majority owned by Implats, said it would transfer 20 percent to local communities and employees while 31 percent would be set aside for the government.

Besides insisting that the government actually pay for the stake, Brown insisted that the sale would only be pushed through once Implats was compensated for land it had released to the state as part of a separate agreement years ago.

“The problems with Implats are many. The biggest is the Zimbabwe situation. How do you solve that one?,” asked Theron.

TROUBLE SHOOTER

It is here that Goodlace's history of working in trouble hot spots will come in handy.

The 52-year old, who earned a name for himself as chief operating officer at Gold Fields and more recently at Metorex, told Reuters that he believes his career has helped him prepare for the opportunity at Implats.

Having started as a learner miner earning just 200 rand ($25.78) a month, Goodlace is now in the big leagues. Implats produces around 25 percent of global platinum group metal supply and employs about 53,000 people including contractors.

“The challenges in the mining industry are numerous but top of mind is always safe production and the goal of zero harm,” he said.

South Africa's platinum industry has been hit by safety-related stoppages which have dragged down production and with a falling platinum price adding to the pain, earnings as well.

Goodlace said he sees future robust demand.

“I strongly believe in the fundamentals of the platinum group metals markets and the primary role that these 'green' metals play in reducing air pollution through their application in autocatalytic converters used on motor vehicles,” Goodlace said.

Industry insiders say Goodlace's also has an ability to remain calm in an industry coloured by drama and political risk.

It comes as little surprise then to learn that he bases his philosophy of life on the Desiderata, a piece of prose written by Max Ehrmann in 1927.

Ehrmann advised that we enjoy our achievements as well as our plans. “Keep interested in your own career, however humble; it is a real possession in the changing fortunes of time.” - Reuters

Groundbreaking for US homes rebounded in April and factory activity gained steam, suggesting the economy remains on a steady, if unspectacular recovery course.

Groundbreaking for US homes rebounded in April and factory activity gained steam, suggesting the economy remains on a steady, if unspectacular recovery course.

The Commerce Department said on Wednesday housing starts increased 2.6 percent to a seasonally adjusted annual rate of 717,000 units, while the Federal Reserve said production at the nation's mines, factories and utilities rose 1.1 percent.

The jump in industrial output, which was the largest since December 2010, was driven by a 4.5 percent increase in utility output, a 1.6 percent gain in mining and a 0.6 percent rise in factory production.

“More positive US economic news pointing to continued moderate growth,” said Jennifer Lee, a senior economist at BOMB Capital Markets in Toronto.

Major US stock indexes opened higher on the data and cautious hopes that debt-stricken Greece would remain in the euro zone. Prices for US Treasury debt fell, while the dollar rose marginally against a basket of currencies.

March's housing starts were revised up to a 699,000-unit pace from a previously reported 654,000 unit rate.

Economists polled by Reuters had forecast housing starts rising to 680,000-unit rate. Compared to April last year, residential construction was up 29.9 percent.

The housing market is showing some signs of life after collapsing six years ago, but remains hobbled by a glut of unsold homes.

However, rising demand for rentals, causing builders to break more ground on apartment projects, is helping to stabilise the market.

“Ideally supply is getting more in line with demand, and low rates may be finally helping the turnaround, said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “However, this housing story is much smaller than news out of Greece and might get easily forgotten.”

Although home building accounts for about 2.3 percent of gross domestic product, the housing market has an outsized reach on the US economy. A separate report on Wednesday showed applications for loans to buy homes fell last week.

Housing starts last month rose across the board. Groundbreaking for single-family homes increased 2.3 percent. This segment accounts for most of the market. Starts for multi-family homes advanced 3.2 percent.

Despite last month's overall jump in starts, they remain less than a third of their peak in January 2006. Residential construction in the first quarter grew at the fastest pace in nearly two years and is expected to contribute to economic growth this year for the first time since 2005.

Last month, housing starts rose in two of the four regions, but fell 20.7 percent in the Northeast, suggesting a pay back for the unusually warm weather that had boosted activity.

Sentiment among home builders touched a five-year high in May, a survey showed on Tuesday, amid growing optimism about current sales and buyer traffic over the next six months.

That suggests the 7 percent drop in permits to a 715,00-unit pace last month would be temporary. March's permits were revised to a 769,000-unit rate, the highest since September 2008.

Economists had expected permits to fall to a 730,000-unit pace from March's previously reported 764,000-unit rate.

Permits to build single-family homes rose 1.9 percent in April to a 475,000-unit pace. Permits for multi-family homes fell 20.8 percent to a 240,000-unit rate. - Reuters

US stock futures rose amid strong data from the housing sector.

US stock futures rose Wednesday amid strong data from the housing sector, yet worries persist that overwhelming debt levels in Greece could fracture the European Union and roil global markets.

Dow Jones industrial average futures rose 47 points to 12,652. Standard & Poor's 500 futures added 6 points to 1,334.2. Nasdaq composite futures rose 11 points to 2,589.25.

US home builders started work on new homes at a seasonally adjusted annual pace 717,000 homes last month, a surprisingly strong number that suggests the housing market is on the mend. That's 2.6 percent more than March's total, which was revised higher by the Commerce Department on Wednesday.

Construction rose for both single-family homes and apartments.

Yet after those figures were released, futures actually gave up some ground with a potentially chaotic situation developing in Greece, where power-sharing talks collapsed Tuesday.

New elections were called for next month, which could determine if the country, reeling from two years of financial turmoil, could bolt from the EU.

There is already concern in other European countries about what that will do to the economy of the entire continent.

On Wednesday, Spain's prime minister warned that the country, which is trembling under a 24.4 percent unemployment rate, could be locked out of international markets due to problems in the EU.

“Right now there is a serious risk that (investors) will not lend us money or they will do so at an astronomical rate,” Mariano Rajoy told Spanish lawmakers.

Financial pressures extend well beyond Europe, however.

The Indian rupee hit a new all-time low against the dollar with investors increasingly seeking a safe place to put their money.

The rupee sank to 54.44 against the dollar Wednesday, surpassing the prior low of 54.39 on December 15.

Investors are weighing the potential for a global economic decline against the strength of the US economy and US corporations.

Both Target Corp. and Deere & Co. boosted their outlooks for the year on rising sales.

Target said that revenue at stores opened at least a year rose 5.3 percent, the strongest performance in six years for that period.

Deere posted a 17 percent spike in second quarter profit and predicted record-high global demand for its signature tractors, harvesters and seeders.

And with Investors clamoring for a piece of Facebook when it makes its initial public offering, expected this week, the company said it would put up 25 percent more shares to satiate that demand Wednesday. The announcement came a day after Facebook boosted the price range for its stock to $34 to $38 per share, up from its previous range of $28 to $35. - Sapa-AP