Fitch says South Africa to prepare for rating downgrade

The global credit rating agency Fitch has warned  that the sacking of Finance Minister Pravin Gordhan will increase the chance South Africa’s sovereign credit rating will take a knock.

In a statement, Fitch said the Cabinet reshuffle signalled a change in policy direction and would raise political tensions, potentially weakening public finances and standards of governance. Fitch also flagged the potential risk to fiscal consolidation as a concern and that the transparency and governance of state-owned enterprises (SOEs) would be halted.

“Continued political instability that adversely affects standards of governance, the economy or public finances, was one of the ratings sensitivities we highlighted in November when we revised the outlook on SA’s BBB-rating to negative from stable.”

‘This decision, and the manner in which it was taken, is likely to cause severe damage to an economy that is in dire need of growth and jobs,’ says CEO Initiative