South Africa to outline "decisive" policy in 2018 after debt rating cut

  • South Africa to outline

South Africa to outline "decisive" policy in 2018 after debt rating cut

"The bottom line is that the ratings decisions of the two most important ratings agencies amount to a vote of no confidence in the new and mysterious "Presidential Fiscal Committee's" capacity to stabilise public finances over the medium term in South Africa", Maynier added.

If S&P and Moody's‚ therefore‚ both downgrade South Africa‚ then far greater losses on the rand can be expected.

The National Treasury now expects growth of just 0.7 percent in 2017 from the 1.3 percent seen earlier, far below the 7 percent level floated in the past as necessary to make a meaningful dent in the unemployment rate.

"What the ratings review highlights is the fact that it is the politics that is killing the economics in South Africa".

Brown said that, while Nedbank was "well positioned to manage the impacts of ratings downgrades", they represented "another setback to our country, and as a result all South Africans will on average be poorer".

It left South Africa's ratings outlook at stable, saying that political instability could abate following the ANC's December elective conference, which may help the government take measures to improve economic growth and stabilize public finances.

"Both low investor confidence and limited progress on structural reforms are rooted in the uncertainty created by the fluid and unpredictable political environment", Brixiova said, adding that this was reflected in the lack of clarity over the government's fiscal plans.

The agency will only complete its review after the 2018 budget.

Kristian Rouz - South Africa is ready to implement fiscal reforms in its next year's budget after the worldwide rating agency S&P cut its local currency debt rating further into "junk". But this has now also been downgraded to non-investment grade.

S&P Global Ratings on Friday lowered South Africa's credit rating to "BB" from 'BB+', citing the country's "weakening" economic and fiscal trajectory. "But, given insatiable demand for emerging market debt, there could be a natural underpin for even South African debt", said Lesiba Mothata, chief economist at Alexander Forbes.

"Weak GDP growth has led to the further deterioration of South Africa's public finances beyond our previous expectations", S&P said.

This is because the country's economic decisions in recent years have largely focused on the distribution of its national income, instead of its growth, S&P said.

A selloff of rand bonds - which comprise about 90 per cent of South Africa's outstanding liabilities - would raise borrowing costs for the nation as it sells more debt to plug a widening budget gap.

Zuma is accused of enriching a new corrupt elite rather than helping the poverty-stricken black majority.