S&P downgrades South Africa to junk status

Following recent changes to the Cabinet by President Jacob Zuma, Standard and Poor’s on Monday announced it had downgraded South Africa to sub-investment grade, reports The Citizen.

African News Agency quoted the international ratings agency as saying it was their opinion that “the executive changes initiated by President Zuma have put at risk fiscal and growth outcomes”.

African News Agency further reported that S&P lowered the country’s long-term foreign currency sovereign credit rating to “BB+” from “BBB-“.

An article on Fin24 explains that South Africa will pay more towards interest on debt with this downgrade to junk status.

The long-term local currency rating was lowered to “BBB-” from “BBB”.

In a statement, the ratings agency said that the outlook on all long-term ratings was negative, and part of the statement further read, “The negative outlook reflects our view that political risks will remain elevated this year, and that policy shifts are likely, which could undermine fiscal and economic growth outcomes more than we currently project.”

TimesLive reports that Moody’s is expected to release its rating review of the country on Friday.

Zuma announced a reshuffle of his Cabinet in the early hours of Friday, which saw Pravin Gordhan axed as finance minister and replaced with Malusi Gigaba.

Pravin’s deputy Mcebisi Jonas also got the boot and was replaced with Sfiso Buthelezi.

Caxton News Service



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