International News

JOHANNESBURG, (MILLAT+APP/AFP) – International
credit rating firm Fitch dropped its outlook for South Africa from stable to negative on Friday, citing the country’s recent political turmoil under President Jacob Zuma.
Zuma has been engulfed by graft scandals and a power struggle with Finance
Minister Pravin Gordhan, while economic growth has fallen to 0.5 percent and
unemployment hit a 13-year high.
“Political risks to standards of governance and policy-making have
increased,” Fitch said in a statement, confirming that it kept South Africa’s
credit rating at one notch above “junk” status.
Moody’s had been expected to issue its updated grading later Friday, but
made no announcement by midnight (2200 GMT).
Standard & Poor’s makes its key announcement on December 2.
Like Fitch, S&P currently has South Africa — the continent’s most
developed economy — rated at the lowest investment grade.
The credit reviews could further drain investor confidence in the country’s
prospects under Zuma and the ANC party, which has ruled since the end of
apartheid.
“The in-fighting within the ANC and the government is likely to continue
over the next year,” Fitch said.
“This will distract policymakers and lead to mixed messages that will
continue to undermine the investment climate, thereby constraining GDP growth.”
Efforts to avoid junk status have been at the centre of political drama for
months, with Zuma loyalists at loggerheads with Gordhan, who is widely
respected among international investors.
“Zuma has focused on removing Gordhan and maintaining his grip on power,
while Gordhan (has) been working very hard to avert a ratings downgrade,” the
Eurasia consultancy group said.