JOHANNESBURG (Reuters) - Fitch said on Friday South Africa’s President Jacob Zuma’s cabinet shake-up heightened political risk and signalled policy change, an outcome that risks the country’s sovereign investment-grade credit ratings.
Zuma’s midnight sacking of Pravin Gordhan as finance minister shook South African markets, undermining his authority and threatening to split the African National Congress (ANC) that has governed since the end of apartheid.
Zuma appointed Malusi Gigaba, who was home affairs minister, to head the Treasury.
Africa’s most industrialised economy faces the risk of being downgraded to junk status owing to weak economic growth after it got a reprieve last year. The economy grew by 0.3 percent in 2016 versus 1.3 percent in the previous year.
Fitch rates South African debt one level above “junk” status.
“The cabinet reshuffle will heighten tensions within the ANC and increase political instability as the party focuses on its policy conference in June and leadership contest in December,” Fitch said in a statement.
“These developments, together with relevant policy announcements from the new cabinet, could result in Fitch reviewing its ratings on the South Africa sovereign.”
Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia