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Fitch affirms South African rating, outlook stable

It says its rating takes into consideration signs of recovering governance standards and the prospects of mild cyclical recovery.

Picture: Supplied.

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

Last month, S&P Global kept its rating unchanged – also at sub-investment grade.

Fitch says South Africa’s rating is weighed down by a low growth trend, sizeable government debt and contingent liabilities.

It says its rating takes into consideration signs of recovering governance standards and the prospects of mild cyclical recovery.

The agency says it’s for this reason that the outlook has remained stable.

But it notes that financial challenges at key state-owned enterprises “remain substantial”.

Fitch says South Africa’s policy-making could be hindered by tensions within the ANC following legal challenges involving party provincial structures.

But it has noted favourable government debt structure, deep local capital markets, a healthy banking sector and strong institutions.

At the same time, Treasury says it believes changes in political leadership have led to a significant improvement in economic confidence.

Its reacted to Fitch re-affirming South Africa’s local and foreign currency credit ratings.

The agency says South Africa’s ratings are weighed down by sizeable government debt and contingent liabilities - but that growth is expected to recover to 1.7% this year and 2.4% in 2019.

Treasury says it has noted this, and it recognises the challenges and opportunities facing the country.

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