{"id":67958,"date":"2024-06-06T13:25:08","date_gmt":"2024-06-06T13:25:08","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa"},"modified":"2024-06-06T14:55:55","modified_gmt":"2024-06-06T14:55:55","slug":"rating-agency-warns-about-poor-outcome-for-south-africa","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa","title":{"rendered":"Rating agency warns about poor outcome for South Africa"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>Fitch Ratings said an ANC, EFF, and MK coalition poses a risk to South Africa\u2019s macroeconomic stability linked to a broad weakening of investor confidence or eroded governance.<\/p>\n

The ruling ANC only received 40% support in the 2024 national elections, which means it needs the support of other large parties to govern.<\/p>\n

The ANC is currently in discussions with other parties to form a coalition government or government of national unity.<\/p>\n

The latest information suggests that an ANC and DA tie-up makes the most sense. However, it faces resistance from within some ANC quarters and from its allies.<\/p>\n

Yesterday, the Congress of South African Trade Unions (Cosatu) rejected a coalition between the ANC and the DA.<\/p>\n

It said the DA, with strong support from the middle class, is fighting against improving workers\u2019 rights. It prefers a coalition with the EFF.<\/p>\n

The SA Communist Party (SACP) has also reportedly told the ANC that it prefers a tie-up with the Julius Malema\u2019s EFF.<\/p>\n

Fitch Ratings said the permutations of government could have very different policy implications, significantly affecting South Africa\u2019s credit profile.<\/p>\n

In January 2024, Fitch affirmed South Africa\u2019s rating at \u2018BB-\u2019, with a Stable Outlook. However, it warned that debt remains a challenge.<\/p>\n

A further significant increase in government debt-to-GDP or a further weakening in trend economic growth could result in negative rating action.<\/p>\n

This is because slow economic growth undermines fiscal consolidation and raises socio-economic pressures.<\/p>\n

\u201cThere is a risk that the weakened public support seen in the election could incentivise the ANC to adopt short-termism policies to secure a coalition or win back public support,\u201d Fitch said.<\/p>\n

\u201cFiscal consolidation could suffer as a result, but we think the fiscal impact will depend on the arrangements the ANC makes to govern.\u201d<\/p>\n

Before the election, Fitch assumed that the ANC would be able to govern with the support of a few relatively small parties. This would have resulted in broad policy continuity.<\/p>\n

However, the ANC\u2019s share of the vote was lower than they expected. It means that it will need support from either the DA, MK, or EFF to rule.<\/p>\n

\u201cSuch backing could come through a coalition, or other means, such as agreements to provide support from outside government, or informal ad-hoc arrangements,\u201d it said.<\/p>\n

An arrangement where the DA supports the ANC from outside government would be more likely than a formal coalition.<\/p>\n

This is because of strong divergences between their voter bases on key issues, such as the direction of foreign policy and historical factors.<\/p>\n

\u201cIf it were secured, support from the DA would probably enable President Cyril Ramaphosa to continue implementing his main priorities, including tackling infrastructure issues,\u201d it said.<\/p>\n

\u201cIt would likely result in the least significant changes to key credit metrics, such as South Africa\u2019s debt trajectory, over the medium term, although fiscal tightening might be enhanced.\u201d<\/p>\n

The DA would likely try to lengthen the phase-in period of the National Health Insurance bill that was signed by President Ramaphosa shortly before the elections.<\/p>\n

The MK and EFF are populist parties and campaigned on radical agendas with many shared elements.<\/p>\n

These included wide-scale land expropriation without compensation and nationalisation of key parts of the economy.<\/p>\n

The EFF and MK also want to stop fiscal consolidation and aggressively increase social grants in South Africa.<\/p>\n

\u201cReaching an agreement with the MK or EFF would require significant concessions by at least one of the parties involved, as the ANC\u2019s stance differs sharply on these policies,\u201d Fitch said.<\/p>\n

However, an agenda advanced by a government backed by the MK or EFF would be less radical than their campaign platforms suggest.<\/p>\n

Moreover, a number of policies proposed by the two parties would require constitutional changes that would be unlikely to pass parliament.<\/p>\n

Nonetheless, Fitch said South Africa\u2019s debt trajectory would face additional risks if the ANC entered into arrangements that rely on support from the MK or EFF.<\/p>\n

\u201cThis outcome could also pose additional challenges to macroeconomic stability, for example, if it led to a broad weakening of investor confidence or eroded governance.\u201d<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. Fitch Ratings said an ANC, EFF, and MK coalition poses a risk to South Africa\u2019s macroeconomic stability linked to a broad weakening of investor confidence or eroded governance. The ruling ANC only received 40% support in the 2024 national elections, which means it needs the support of other large parties to govern. […]<\/p>\n","protected":false},"author":84,"featured_media":67956,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[274,315,275],"class_list":["post-67958","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nRating agency warns about poor outcome for South Africa - South Africa<\/title>\n<meta name=\"description\" content=\"Fitch Ratings said an ANC, EFF, and MK coalition poses a risk to South Africa\u2019s macroeconomic stability linked to a broa ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Rating agency warns about poor outcome for South Africa\" \/>\n<meta property=\"og:description\" content=\"Fitch Ratings said an ANC, EFF, and MK coalition poses a risk to South Africa\u2019s macroeconomic stability linked to a broa ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2024-06-06T13:25:08+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-06-06T14:55:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/06\/sm_1717673022.238649.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"768\" \/>\n\t<meta property=\"og:image:height\" content=\"432\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Rating agency warns about poor outcome for South Africa\",\"datePublished\":\"2024-06-06T13:25:08+00:00\",\"dateModified\":\"2024-06-06T14:55:55+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa\"},\"wordCount\":697,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/06\/sm_1717673022.238649.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-South-Africa\",\"South-Africa\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/rating-agency-warns-about-poor-outcome-for-south-africa\",\"name\":\"Rating agency warns about poor outcome for South Africa - 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