South Africa should prepare for downgrade
Global politics and economic risk consultants at Control Risk on Monday released a report on the biggest risks facing South Africa in 2016 and said junk status was a reality.
The economy was downgraded from stable to negative in November 2015.
Control Risk's Willis Fleming said Finance Minister Pravin Gordhan could not avoid the current state of the economy.
"Mr Gordhan made some good noises during his budget speech, but we don't think he was able to convince the rating agencies of his ability to get enough revenues in and he's going to borrow again at higher rates - because of uncertainty about the downgrade - and this is going to increase debt service costs which is the first thing that rating agencies look at," Flemming said.
Service delivery was listed as another risk with Control Risk's George Nicholls warning that factions and infighting within the ANC could have a negative impact.
"The ANC hasn't got one particular view. It's got many, many ideological views which are challenging and contrasting and fighting with each other for space. Both power and water is constrained. We haven't experienced load shedding recently, but the main reason for that is demand is down and supply remains very tight," Nicholls said.
Reporting by Samkele Maseko
Edited by Faith Daniels