Finance Minister Pravin Gordhan has said it was still unclear whether South Africa’s debt could be downgraded by Standard & Poor’s and Fitch after holding discussions with the rating agencies last week, the Financial Mail reported on Thursday.
A team from S&P met officials in Africa’s most industrialised country last week before their review due to be published on June 3, which could see the country’s debt rating cut to junk. South African officials also spoke to Fitch by phone, the Treasury told Reuters on Monday.
“It’s hard to say,” Gordhan told the Financial Mail when asked whether he was able to convince the rating agencies not to downgrade South Africa.
“Look, we were able to explain everything they wanted explained. In fiscal terms, we have a credible story, and when its comes to building confidence, we have a credible story. With enough work, we can also turn the corner as far as growth is concerned,” Gordhan told the weekly.
“They said to us, don’t tell us what you want to do, show us the evidence. And we’ve done that,” he told the Financial Mail.
Seen by numerous analysts as the most likely to push South Africa to “junk” status, S&P said earlier in May that the weak economy posed an immediate risk to the rating.
Last week, the central bank cut its 2016 growth forecast to 0.6 percent from 0.8 percent, reflecting the risk the economy will tip into recession.
S&P rates the debt of Africa’s most industrialised country at BBB-, one notch above speculative grade and with a negative outlook, while Fitch, also due to publish its review next month, assigns a similar rating after a downgrade in December.
Earlier this month, the other major rating agency, Moody’s, kept South Africa’s rating on hold at Baa2 with a negative outlook, two notches above junk.
(Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia)