Fitch reaffirms South Africa BB+ rating

Fitch says it is unlikely that government will raise its expenditure ceilings, which has served as anchor for fiscal policy.

Picture: Supplied.

JOHANNESBURG - Ratings agency Fitch has affirmed South Africa’s rating at 'BB+' with a stable outlook.

It says South Africa's ratings are weighed down by the low trend in gross domestic product (GDP) growth and deteriorating governance.

The agency and Standard & Poors Global downgraded the country to junk status earlier this year.

Fitch has cited in-fighting within the ANC, saying it "remains particularly strong" ahead of the electoral conference in December.

Fitch says it is unlikely that government will raise its expenditure ceilings, which have served as anchor for fiscal policy.

The agency says South African GDP growth remains a key rating weakness, with a five-year average of just 1.6% - compared with a 'BB' category median of 3.5%.

Fitch says South Africa's current account deficit narrowed to 3.2% of GDP in 2016 from a peak of 5.9% in 2013 - and is likely to remain around 3% this year and next year.

It adds that weak growth of domestic demand, particularly import-intensive private investment, has led to import compression.

(Edited by Zinhle Nkosi)