NEW YORK Oct 12 (Reuters) – Standard Poor’s on Friday cut
South Africa’s credit rating one notch to BBB with a negative
outlook, saying mining strikes and social tension could reduce
fiscal flexibility and hurt growth.
“We expect underlying social tensions may result in
amplified spending pressures and reduce fiscal flexibility for
the government,” SP said in a statement.
In particular, the ratings agency said mining strikes could
influence political debate ahead of 2014 elections and “may
increase uncertainties related to the African National Congress’
future policy framework.”
SP’s downgrade from BBB-plus takes it one notch below both
Moody’s Investors Service’s Baa1 rating with a negative outlook
as well as Fitch Ratings’ BBB-plus rating, also with a negative
outlook.
“The negative outlook reflects our view that the medium-term
political, economic and fiscal ramifications of South Africa’s
social tensions could deteriorate beyond our current
expectations,” SP said.
SP added that it sees South African growth softening to
around 2.5 percent in 2012 and the budget deficit increasing to
at least 5.1 percent of output.
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