Fitch Ratings agency on Friday downgraded South Africa to junk status, citing the removal of Pravin Gordhan as Finance Minister.
Fitch said President Jacob Zuma’s decision to fire Gordhan last week, was likely to see a change in economic policy.
“In Fitch’s view, the Cabinet reshuffle, which involved the replacement of Gordhan, and the deputy Mcebisi Jonas, is likely to result in a change in the direction of economic policy.”
It suggested Gordhan may have been punished for efforts to improve the running of parastatals and said with him gone, these were now more likely to be a significant burden on the state’s balance sheet.
“The reshuffle partly reflected efforts by the out-going finance minister to improve the governance of state-owned enterprises.”
Fitch’s decision follows four days after S&P Global downgraded South Africa’s credit rating to junk status.
It came as tens of thousands of South Africans marched through the streets of major cities to protest against Zuma.
Fitch said better governance would be one of the factors that could prompt ratings agencies to rethink its position on South Africa.