Global credit ratings agency Standard & Poor’s (S&P) has warned that any further policy errors by government could lead to a further ratings downgrade, reported Reuters news agency.
This follows a Cabinet reshuffle within the finance ministry which saw president Jacob Zuma appointing two new finance ministers within a week, triggering a collapse in the rand, and sending stocks plummeting.
In its November review of South Africa’s credit status S&P kept its rating (BBB-), one notch above sub-investment grade, but changed the outlook to negative from stable. A further downgrade would signify junk status.
“Certainly events before Christmas (were) a good sign of how policy mistakes can be made and how they can have a tremendous impact on something like the exchange rate very quickly,” Konrad Reuss, sub-Saharan Africa head of S&P was quoted by Reuters as saying, adding that the agency felt it had to flag downside risks in this current environment for South Africa.
Ratings agency Fitch also slashed the country’s rating to a notch above junk in December, while Moody’s rating is two notches above junk with a negative outlook.
