Fitch unsure SA will pursue conservative policies
Thématique :
sud afrique
September 4, 2008
Fitch Ratings was unsure the government would continue to pursue "conservative" economic policies after elections next year, the ratings agency said yesterday.
Growing political uncertainty after the election of a new leadership at the ANC was one of the factors that led Fitch to cut its outlook on South Africa's credit rating, Tertius Smith, the managing director of Fitch Southern Africa, said yesterday.
Fitch lowered South Africa's credit rating outlook to stable from positive in June, indicating it would not upgrade it from BBB plus, the third-lowest investment-grade level.
Jacob Zuma, who defeated President Thabo Mbeki to become ANC leader in December, is backed by labour unions and communist groups that have criticised the government's inflation targeting policy and fiscal surplus.
"In the middle of 2007, when we put South Africa on a positive outlook, we were of the opinion that irrespective of what political changes happened next year, the current very solid monetary and fiscal policies were actually ingrained in the ANC," Smith said. "However, we are now not so sure about that - whether there will be a continuation of those conservative policies, which are normally positive for a rating, or whether we will see a more populist approach."
Rating firms are waiting to see whether the political transition after elections will be a smooth one.
Moody's Investors Service has not upgraded South Africa's Baa1 foreign currency rating since it put it on a positive outlook in June last year. Baa1 is the third-lowest investment grade and eight levels below the highest Aaa rating.
