Junk status warning for South Africa after latest downgrade


Treasury has warned that South Africa needs to reinvigorate the economy urgently or face a downgrade to ‘junk’ status by ratings firms later in the year.

Treasury’s comment comes after ratings agency Fitch downgraded the country’s local currency debt rating by one level to one notch above subinvestment grade.

Fitch downgraded South Africa’s rand denominated debt to BBB- in a review published on Friday.

According to Reuters, South Africa was one of 23 countries to have their local currency rating cut. It said that approximately 90% of the country’s R2.2 trillion debt is in local currency.

Treasury said in a statement that the revised guidelines by Fitch reflects its assessment that the credit risk profile of sovereign local and foreign currency debt should be closely aligned.

“As a result of the above change in approach, the agency has aligned South Africa’s long-term local currency rating to the long-term foreign currency rating at ‘BBB-’ with a stable outlook.”

Treasury said that although the action represents an alignment, “it also serves as a timely reminder of the risks of a downgrade that lie ahead and the urgency of actions required to reinvigorate the economy”.

“We must persist with, and redouble our efforts to work together – government, business and labour – to improve our growth prospects and to create more business and work opportunities,” Treasury said.

It added that the National Development Plan and the 9-point plan already identified some of the reform measures that, “if we continue to implement diligently, will alter our fortunes in the period ahead”.

The SA Reserve Bank’s latest forecast is for 0% growth in 2016 compared with 0.6% previously,  governor Lesetja Kganyago said last week.

Growth rates of 1.1% and 1.5% are now forecast for the next two years, down from 1.3% and 1.7% previously. Sarb’s estimate of potential output has been revised down marginally to 1.4% in 2016, rising to 1.7% in 2018.


  1. 41510 892642Wow, superb weblog layout! How long have you been blogging for? you make blogging appear straightforward. The overall appear of your web site is magnificent, as properly as the content material! xrumer 741287

  2. 691523 80054Youll be able use all sorts of advised attractions with various car treatments. A quantity of sell traditional tools numerous demand families for almost any event for any investment district, or even for a holiday in new york. ???? ??? ?????? ????? 615116

  3. 869713 905511Take a peek at the following ideas what follows discover perfect approach to follow such a mainly because you structure your small business this afternoon. earn funds 672773

  4. 218062 41258Having read this I thought it was quite informative. I appreciate you taking the time and effort to put this post together. I once once again uncover myself spending strategy to considerably time both reading and commenting. But so what, it was nonetheless worth it! 939154

  5. 979096 925224You might discover two to three new levels inside L . a . Weight loss and any one someone is incredibly essential. Initial stage might be real melting away rrn the body. lose weight 639614

  6. 396964 843290Admiring the time and effort you put into your site and in depth details you offer. It is excellent to come across a weblog every once in a although that isnt exactly the same out of date rehashed material. Excellent read! Ive saved your web site and Im including your RSS feeds to my Google account. 381181

  7. Hello there I am so happy I found your weblog, I really found you by accident,
    while I was searching on Askjeeve for something else, Nonetheless I aam heree now and would just like to say thanks a lot forr a incredible post andd a all round exciting blog (I alsdo love the theme/design), I don’t have time
    to go through it all at the moment but I have bookmarked it and also
    added in your RSS feeds, so when I have time I will
    bee back to read much more, Please do keep up the awesome work.

  8. Have you ever considered publishing an e-book orr guest authoring on other blogs?

    I have a blog centered on thhe same ideas you discss annd would really like to have
    you share some stories/information. I know my viewers would enjoy your
    work. If you are even remotely interested, feel free too send me an e-mail.