Standard Bank is the latest financial institution to express concern over a\u00a0possible downgrade of South Africa’s sovereign credit rating to junk status.<\/p>\n
According to Bloomberg<\/a>, investors are already pricing in a credit-rating downgrade for the country, amid muted economic growth.<\/p>\n The economy grew by just 0.6% in the last quarter of 2015, down from 1% in the previous quarter, while the rand remains fragile against its global counterparts.<\/p>\n South Africa can\u2019t avoid a credit-rating downgrade with good fiscal numbers alone, Finance Minister Pravin Gordhan told Bloomberg.<\/p>\n \u201cThere was a time when ratings agencies would take their matrix and tick the boxes to say \u2018fiscally you look sound,\u2019\u201d Gordhan said at a post-budget briefing in Johannesburg on Thursday.<\/p>\n \u201cIn the last six years the goalposts have shifted and now include fiscal stability, indebtedness, where growth is going to come from and the political economy,” he said.<\/p>\n \u201cIt doesn\u2019t matter if it\u2019s too little too late, let\u2019s give it our best shot,\u201d Gordhan said on whether the measures in the budget were enough to avert a downgrade. \u201cIf it was too late, at least the people will say we tried.\u201d<\/p>\n Bloomberg noted that credit default swaps, used to insure the country’s debt against default for five years, are higher than that of Turkey and Russia, which are both rated junk by ratings firm, S&P.<\/p>\n Last month, the World Bank warned that South Africa is at risk of slipping into recession in 2016, while ratings firm Moody\u2019s said that the country\u2019s worst drought on record could push the country over the edge.<\/p>\n Moody’s current outlook for South Africa is negative, as is S&P, while Fitch’s outlook is stable for the country.<\/p>\n Why South Africa will enter recession this year<\/a><\/strong><\/p>\n Budget won\u2019t prevent SA downgrade: DA<\/a><\/strong><\/p>\nMore on South Africa<\/h3>\n