Fitch ratings agency has followed the lead of Standard & Poor (S&P) and downgraded South Africa to BB+ from BBB-. Effectively, this means the agency is declaring the country ‘junk’.
The downgrade is a direct result of the recent cabinet reshuffle and S&P’s declaration of SA to junk status earlier this week. Fitch has said that in order to gain positive rating action, an improvement in governance standards that support strong business and investment and in the country’s net external debt, a marked narrowing in the budget deficit, a reduction in government debt and an improvement in the country’s net external debt would help.
Former finance minister Pravin Gordhan’s budget plans were aiming to align with these factors, however, his dismissal from the cabinet by Zuma has seen the country’s economic situation taking a bad turn.
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