S Africa braces for credit re­view as growth falls

Kuwait Times - - BUSINESS -

JOHANNESBURG:

South Africa braced for a po­ten­tially dam­ag­ing credit rat­ing re­view yes­ter­day as Moody’s re­leases its lat­est as­sess­ment amid po­lit­i­cal ten­sion, re­form block­ages and weak eco­nomic data. Pres­i­dent Ja­cob Zuma has been en­gulfed by graft scan­dals and a power strug­gle with Fi­nance Min­is­ter Pravin Gord­han, while growth has fallen to 0.5 per­cent and un­em­ploy­ment hit a 13year high.

Moody’s was ex­pected to is­sue its up­dated grad­ing later, be­fore Stan­dard & Poor’s makes its key an­nounce­ment a week later on De­cem­ber 2. S&P cur­rently has South Africa-the con­ti­nent’s most de­vel­oped econ­omy-rated at the low­est in­vest­ment grade, and a down­grade would put the country’s bonds into so­called “junk” sta­tus. Moody’s cur­rently rates South Africa two lev­els above junk. Any down­ward re­view would fur­ther drain in­vestor con­fi­dence in the country’s prospects un­der Zuma and the ANC party, which has ruled since the end of apartheid.

“We are politi­ciz­ing down­grad­ing. That is our prob­lem,” the pres­i­dent told par­lia­ment this week. “We have been work­ing hard... and we are talk­ing to them (rat­ing agen­cies).” Ef­forts to avoid junk sta­tus have been at the cen­tre of po­lit­i­cal drama for months, with Zuma loy­al­ists at log­ger­heads with Gord­han, who is widely re­spected among in­ter­na­tional in­vestors.

“Zuma has fo­cused on re­mov­ing Gord­han and main­tain­ing his grip on power, while Gord­han (has) been work­ing very hard to avert a rat­ings down­grade,” the Eura­sia con­sul­tancy group said in brief­ing note. —AFP

JOHANNESBURG: This file photo taken on March 20, 2015 shows peo­ple from a school group look­ing at an elec­tronic screen with stock in­dex fig­ures at the Johannesburg Stock Ex­change (JSE). South Africa braced for a po­ten­tially dam­ag­ing credit rat­ing re­view yes­ter­day as Moody’s re­leases its lat­est as­sess­ment amid po­lit­i­cal ten­sion, re­form block­ages and weak eco­nomic data. — AFP

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