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Fitch: SA faces downgrade unless power issues addressed

The agency decided on Friday to keep its rating unchanged at BBB, 2 notches above junk status.

This picture taken on 17 January, 2012 shows a close-up of a page of the Ratings agency Fitch website. Picture: AFP.

JOHANNESBURG - Ratings agency Fitch has warned government that unless power supply problems are addressed, the country could face a downgrade.

The agency decided on Friday to keep its rating unchanged at BBB, but this is two notches above junk status.

In a statement, Fitch said the negative outlook reflected risk factors including weak GDP growth and a failure to reduce the budget deficit and stabilise the government debt/GDP ratio "that may, individually or collectively, result in a downgrade".

"Fitch's sensitivity analysis does not currently anticipate developments with a material likelihood of leading to an upgrade," it added.

The Treasury has assured Fitch that steps are being taken to address the power problem.

The past few months have seen continued load shedding but Eskom has promised to meet demand soon.

South Africa's GDP is also a concern with disappointing growth of only 1.3% in the first quarter.

Government has also been warned to reduce the budget deficit and stabilise debt.

The past few weeks have seen limited or no load shedding but the pressure is now on to make sure this becomes to norm.

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