Posted April 4, 2017 4:47 pm by Comments

Standard & Poor’s Global has cut the South African government’s credit rating to “junk status” for the first time in more than 17 years following the move by President Jacob Zuma to reshuffle his Cabinet last week – including the sacking of finance minister Pravin Gordhan. Here is an excerpt from the ratings downgrade:

RATIONALE

The downgrade reflects our view that the divisions in the ANC-led government that have led to changes in the executive leadership, including the finance minister, have put policy continuity at risk. This has increased the likelihood that economic growth and fiscal outcomes could suffer. The rating action also reflects our view that contingent liabilities to the state, particularly in the energy sector, are on the rise, and that previous plans to improve the underlying financial position of Eskom may not be implemented in a comprehensive and timely manner. In our view, higher risks of budgetary slippage will also put upward pressure on South Africa’s cost of capital, further dampening already-modest growth….

The Rand Daily Mail has a complete excerpt of the S&P South Africa downgrade under: What the rating agency said about SA. Check out our South Africa ADR list and our South Africa ETF list plus our investing in South Africa news.

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