Hilary Joffe Columnist

Markets are waiting to see if the decision by Fitch to junk SA’s foreign and local currency ratings on Friday will be followed by further downgrades by Moody’s and S&P, with estimates of at least $8bn-$13bn (R100bn-R150bn) of forced selling by foreign investors if the other agencies downgrade SA’s local currency rating. Fitch said on Friday that recent political events, including the cabinet reshuffle, would weaken standards of governance and public finances and would result in a change in the direction of economic policy. It expressed concern that the reshuffle would undermine — if not reverse — progress in state-owned enterprise governance and would probably move the nuclear programme forward relatively quickly, implying that the Treasury would have to substantially increase guarantees to Eskom. The CEO Initiative said on Friday the wellbeing of South Africans had been dealt a blow and urged the government to maintain continuity and apply strict discipline in managing the country’...

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