Fitch ratings agency has downgraded South Africa's foreign and local currency ratings to sub investment grade, or junk status.
The agency says the country's long-term ratings downgrade follows recent political events, including the Cabinet reshuffle, which Fitch believes will weaken standards of governance and public finances.
“In Fitch's view, the cabinet reshuffle, which involved the replacement of the finance minister, Pravin Gordhan, and the deputy finance minister, Mcebisi Jonas, is likely to result in a change in the direction of economic policy.
“The reshuffle partly reflected efforts by the out-going finance minister to improve the governance of state-owned enterprises (SOEs). The reshuffle is likely to undermine, if not reverse, progress in SOE governance, raising the risk that SOE debt could migrate onto the government's balance sheet,” the agency said in a statement.
Fitch said differences over South Africa’s nuclear programme may have contributed to Zuma’s cabinet reshuffle.
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