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Another day of ratings jitters for SA

S&P Global rates the country one notch above junk status and it’s hoped that the country can avoid a downgrade.

FILE: Credit rating agency Standard & Poor's. Picture: AFP.

JOHANNESBURG – Standard & Poor’s Global will reveal on Friday whether it is downgrading the country - the third and final assessment by a major ratings agency.

Moody’s and Fitch have already announced they will be keeping their ratings unchanged, but Fitch adjusted its outlook to negative.

S&P Global rates the country one notch above junk status and it’s hoped that the country can avoid a downgrade.

Economist at Pan African Investment and Research, Dr. Iraj Abedian, says while there may not be a downgrade, S&P Global will be critical of government.

“They’re going to issue few specific warnings around political instability.”

Standard Bank’s Goolam Ballim says there have been signs of improvement.

“My sense is there’s an acceptance that South Africa’s future growth is going to have to be forged in a more stable political economy.”

Investment Solutions' Lesiba Motata says South Africa doesn’t have the same problems as others countries.

“Most of those countries in emerging markets have issues, their fiscal policy was in disarray.”

Finance Minister Pravin Gordhan and business are hoping that they have done enough to clear this final economic hurdle.

POLITICAL INFIGHTING, UNEMPLOYMENT FIGURES

With the final credit rating is due to be delivered on Friday, there are concerns that recent political events and unemployment figures will be taken into account when S&P Global announces its rating.

Moody’s and Fitch outlined political instability and problems with state-owned enterprises as major stumbling blocks.

Economists say apparent divisions within the governing party, as highlighted in the latest African National Congress National Executive Committee meeting, are concerning.

However, Abedian says it’s good that the problems are now out in the open.

“It’s essentially an open acknowledgement by the governing party that things are in chaos at home.”

He says the NEC meeting was also a warning for President Jacob Zuma.

South Africa survived a credit downgrade in June, but S&P Global will be taking a number of factors into account when deciding whether keep the country above junk status.

(Edited by Leeto M Khoza)