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CEO Initiative welcomes Fitch’s decision to retain SA rating

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

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

JOHANNESBURG - The CEO Initiative has welcomed the decision by rating agency Fitch to retain South Africa's sovereign debt rating at BB+ with a stable outlook.

The initiative says while this is evidence of stabilising conditions in the economy, the sub-investment grade rating serves as a reminder that much more work is needed for an improvement in the country's debt ratings.

The CEO Initiative formed of leaders from various sectors has been working with government and labour for more than two years on efforts to improve the country's credit rating.

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.

Additional reporting by Ray White.

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