South Africa Granted Credit Rating Reprieve
The South African government on Friday welcomed a decision by Standard and Poor's to leave the country's credit rating on hold, but complained that the retained negative outlook was unfair.
The Treasury Department said S&P's decision to keep the "BBB" rating with negative outlook "did not take adequate account of progress made" in addressing economic vulnerabilities.
South Africa's poor economic growth, weak exports, fragile government budget, volatile labor market and moribund economic reforms have made it a candidate for a cut.
But this week S&P, along with Fitch, held fire.
"In our view, the incumbent South African government will ensure broad, largely pragmatic, policy continuity, and tensions in the mining sector have reduced," S&P said Friday.
Still the rating agency warned that a downgrade could come "if external imbalances continue to increase, or funding for South Africa's current account or fiscal deficits becomes less available."
A cut could also come if labor disputes escalate again, growth slows further or if political tensions rise.
A further downgrade could increase South Africa's cost of borrowing on bond markets.
South Africa has the continent's biggest economy.
Source: Agence France Presse
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