Rating agencies are shortly expected to announce their decision on whether to retain South Africa’s sovereign credit rating, or to downgrade it. The current rank assigned by Moody’s is two notches above sub-investment grade (with a negative outlook). Fellow agencies Fitch and Standard and Poor’s both rank South Africa just one notch above “junk” status. The country was able to avoid the downgrade to “junk status” in both May and June. But the scheduled reviews have reignited fears of a possible downgrade, a decision that would set the stage either for South Africa’s economic revival, or its demise. Despite minor differences, all three agencies weigh up a number of ubiquitous and well-defined criteria when assigning a rank to a country’s sovereign debt. In the current review of South Africa they will be scrutinising growth prospects, the fiscal balance and its external debt levels particularly closely. In their earlier reviews the rating agencies warned that South Africa’s annual gro...

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