Any further policy errors by South Africa will lead to its credit rating being downgraded, according to Standard & Poor’s.
This is according to a report by Reuters, and follows a recent reshuffle within the finance ministry which saw president Jacob Zuma appointing two new finance ministers within a week, triggering a collapse in the rand, and sending stocks plummeting.
“Certainly events before Christmas (were) a good sign of how policy mistakes can be made and how they can have a tremendous impact on something like the exchange rate very quickly,” said Konrad Reuss, sub-Saharan Africa head of S&P.
In its November review of South Africa’s credit status S&P kept its rating at BBB-, one notch above sub-investment grade, but changed the outlook to negative from stable.
“We certainly felt we had to flag downside risks in this current environment for South Africa which would result in a downgrade in particular if growth continues to disappoint significantly,” Reuss said.
Reuters pointed out that ratings agency Fitch also slashed the country’s rating to a notch above junk in December, while Moody’s rating is two notches above junk with a negative outlook.
Earlier this week, the International Monetary Fund changed its 2016 growth forecast for South Africa to 0.7% from 1.3% before.