Two of the three major agencies lowered their ratings of South Africa’s debt:
Fitch Ratings on Friday cut South Africa’s debt to one notch above “junk” status, an indictment of the government’s persistent fumbling of policies that could help to boost growth and woo foreign investors. […]Standard & Poor’s Ratings Services, meanwhile, lowered its outlook on South Africa’s debt to negative from stable.“The country faces domestic constraints including an inadequate electricity supply and overall weak business confidence inhibiting substantial private sector investment,” S&P said.Moody’s Investors Service is now alone in rating South Africa’s debt one notch higher than its competitors, at Baa2 on its scale.
At their core, South Africa’s problems have much in common with those of other poorly governed commodity producers around the developing world. When times were good and prices were high for commodities ranging from soybeans to platinum, the developing countries that produced them were flush with cash. Some used the windfall wisely; some used the good times as a reason to postpone painful reforms and to indulge their political leaders’ tastes for populist rhetoric and corrupt practice.