Fitch gives SA 'guidance' on upcoming ratings

Fitch has advised government against populist measures such as introducing a minimum wage.

Picure: Supplied.

JOHANNESBURG - Ratings agency Fitch has advised government against populist measures such as introducing a minimum wage ahead of the local government elections.

The agency is expected to publish a review of South Africa's debt rating on 3 June and has now released some "guidance" in terms of what it'll be looking at.

It says the country's underperformance of GDP growth poses a risk to the rating.

The upcoming elections, leadership discussions and GDP growth are all issues that may affect South Africa's rating.

Jan Friederich from Fitch says there are some challenges that they are looking at.

"One comes from a possibility of a fading commitment to fiscal consolidation from the political leadership. Another comes from the continued downward evolutions to GDP forecast, which we are seeing right now."

Fitch also warns that "quick fixes" in fiscal policy could discourage investment in the run up to elections such as introducing a minimum wage, something government is looking at.