The ratings agency also said that economic reforms must be implemented to avoid a downgrade in December, having, on Friday, kept its rating at BBB- with a negative outlook and lowered its economic growth estimate to 0.6 percent from 1.6 percent.
South Africa’s economy grew by only 1.3 percent in 2015 and major sectors in Africa’s most industrialised nation have shrunk due to a weak rand, low consumer demand and rising inflation.
“The potential impact of increasing political tensions within the ruling ANC and within government can potentially derail policy implementation and the reform endeavours that have been intensified since the beginning of this year,” S&P’s Africa analyst, Gardner Rusike, told a media conference call.
President Jacob Zuma has faced mounting criticism from the opposition over managing the economy after he changed finance ministers twice in a week in December. But the ruling African National Congress party has backed him, helping him survive an impeachment vote in Parliament in April.
Finance Minister Pravin Gordhan said on Monday the reprieve from a downgrade to “junk” status by S&P was an opportunity to focus on improving the economy, creating jobs and implementing reforms that would see GDP move towards two percent.
“We have lots going for us if we can convert plans into action,” he said on state-owned SABC television.
South Africa now awaits a review by Fitch, which also rates its debt one notch above non-investment grade, with the decision due on Wednesday, according to the Treasury.
