INVESTMENT
Fitch retains its junk rating for SA
The agency warns financial challenges at state-owned enterprises remain substantial and government debt has yet to stabilise
Ratings agency Fitch Ratings has lifted its forecasts of SA’s economic growth rate but has kept its subinvestment-grade (junk) rating on SA, citing low growth and risks to public finances, as well as the risks that “the highest inequality in the world” pose for economic policy. In an update on Friday, Fitch struck a relatively positive note, pointing to a recovery in governance and a “mild cyclical recovery”, and increasing its growth forecast for 2018 from 1.6% to 1.7% and for 2019 from 2% to 2.4%. However, it warned financial challenges at state-owned enterprises remained substantial and government debt had yet to stabilise. Fitch said it could downgrade if fiscal deficits widened or a large part of SOE debt migrated to the sovereign balance sheet, or if SA’s foreign debt rose, but it could upgrade if the budget deficit narrowed to levels that would reduce the state debt ratio or if the trend economic growth rate strengthened. Though Fitch cited the speed with which Cyril Ramaphos...
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