Ratings agency Fitch maintained South Africa’s BBB rating, two notches above junk status.
It went against expectations that it would lower the country’s rating.
However, it kept its negative outlook and cut its gross domestic product (GDP) growth forecast for this year to 1.5 percent, from 1.7 percent, due to strikes and electricity supply disruptions. It also lowered its growth estimate for next year to 2.5 percent, from 3 percent.
Second ratings agency, Standard & Poor’s, kept its rating at BBB, the lowest investment level, with a stable outlook.
In October, the South African treasury set out a five-year economic framework. It pledged tax rises, a freeze on new jobs in the public sector and ensuring that financial support for state firms would not widen the budget deficit, which is forecast at 4.1 percent of GDP for 2014/15.
“The framework also recognises the need to support job creation through sector-based interventions, employment incentives, the expanded public works programme and the jobs fund,” the treasury said.
“Important structural reforms are under way in major economic sectors that will boost the economy’s growth,” the National Treasury said in response to the ratings reviews.
South Africa’s current account deficit, which is running at 6 percent of GDP, has been a major source of concern for investors, putting pressure on the rand.
Last month, a third international rating agency, Moody’s, downgraded South Africa, citing poor prospects for medium-term economic growth and rising public debt.
A lower rating means it is more expensive for a country to borrow money on international markets. - Reuters