FITCH WARNING ON POPULIST MEASURES IN SOUTH AFRICA DRAW MIXED RESPONSE

A warning from international ratings agency Fitch against the South African government adopting populist policies following the poor showing by the ruling African National Congress (ANC) party in last week’s local government elections has drawn a mixed response from economists.

Britain-based economist Peter Attard Montalto says it would be extraordinary to expect that there would be no change in policy, while North West University economist Raymond Parsons believes it is unlikely that government will depart from the financial commitments it has made to avoid a downgrade.

Fitch’s ratings agency says the loss of support for the ruling party raises the risk of populist government policies. These risks may include costly spending measures which may require breaching expenditure ceilings.

Support for the ruling ANC dropped to below 60 per cent nationally for the first time since democratic elections were held in the country following the end of apartheid in 1994.

Parsons says the well-run municipal elections send a positive message to investors and ratings agencies and the results present a new opportunity and new energy to address socio-economic challenges.

Fitch has South Africa one notch above junk status and will review the country again later in the year.

Source: NAM NEWS NETWORK