JOHANNESBURG South Africa (Xinhua)
-- Ratings agency Fitch said
on Wednesday that it remains cautiously optimistic about
the economic situation in South Africa following the
election of Cyril Ramaphosa as leader of the ruling
party, the African National Congress (ANC).
agency predicted a discord in the implementation of
economic and fiscal policies considering the closeness
of the voting result. Fitch Ratings noted that “policy
paralysis” existed in the run-up to the ANC election and
argued that the impasse will not be resolved quickly.
Africa’s rand edged up as much as 4 percent, the most in
two years, late on Monday after officials announced
Ramaphosa had beaten his main rival, Nkosazana
Dlamini-Zuma. It also advanced 0.2 percent to R12.72 to
the U.S dollar by 5:00 p.m. on Tuesday.
repercussions of his victory will be far-reaching, but
they are likely to remain unpredictable ahead of the
2019 elections,” Fitch said, “The rise in the rand in
anticipation of Ramaphosa’s victory reflects his public
commitment to tackle corruption and revive the economy.
If businesses and consumers view the outcome favorably,
this could give a near-term boost to growth,” it added.
slim victory of Ramaphosa, Fitch ratings agency expected
further political division within ANC which will result
in the inconsistency in policy-making. “As long as
growth is too weak to significantly reduce inequality,
the pressure will remain for redistributive policies,
even if they weaken SA’s growth potential,” said Fitch.
Fitch affirmed SA’s ‘BB+’/Stable sovereign rating but
highlighted a number of issues, which indicated a weaker
fiscal measures, stronger gross domestic product (GDP)
growth and improvements in standards of governance that
may emerge in the wake of the ANC’s national conference
can mitigate those trends, remain a key element of our
sovereign credit assessment,” said Fitch.
ratings agency Moody’s said the election of Ramaphosa
opens up a tentative possibility of a “credit positive”
shift in South Africa policy and an increase in business
confidence. This could reverse the gradual deterioration
in the country’s credit fundamentals, it said.
a former businessman was seen by many investors more
Moody’s placed South Africa’s sovereign debt, which has
a Baa3 rating, on review for downgrade. However, the
ratings agency S&P Global did not place South Africa on
the sub-investment grade.