Ratings agency Fitch says political uncertainty will persist following the election of Cyril Ramaphosa as leader of the African National Congress.
In a statement on Thursday, Fitch said the closeness of Ramaphosa’s victory against Nkosazana Dlamini-Zuma and the likely challenges in agreeing and implementing changes to existing economic and fiscal settings suggest that the policy paralysis prior to the governing party’s 16-20 December 54th National Conference may not be quickly resolved.
Ramaphosa now appears likely to succeed President Jacob Zuma as the country’s leader after a 2019 parliamentary election, or earlier if Zuma is forced to quit before completing his full term.
Fitch said the full repercussions of Ramaphosa’s victory were likely to remain unpredictable ahead of the 2019 vote, although again in the rand currency reflected optimism over his public commitment to tackle corruption and revive the economy.
“If businesses and consumers view the outcome favourably, this could give a near-term boost to growth,” the agency said.
“However, political uncertainty and policy challenges remain significant,” it added, saying the division of the party chairmanship and the national presidency could increase inefficiencies in policy making if there is a period of “cohabitation”.
Fitch said an early indicator of the political and policy consequences may include whether Ramaphosa sought to recall Zuma as national president and whether he would have the necessary support within the ANC.
Other indicators of Ramaphosa’s ambition for change and power to carry through his agenda include the January 8 statement, the national budget in February, as well as other major economic policy announcements and changes in key personnel such as government ministers and leaders of state-owned enterprises and institutions.
Last month Fitch kept both South Africa’s local and foreign currency credit ratings unchanged at BB+ one notch below investment grade, with a stable outlook, saying while a number of developments point to a weaker fiscal outlook and consequent faster pace of debt accumulation, potential fiscal consolidation measures after the ANC conference could mitigate those trends.
– African News Agency (ANA)