JOHANNESBURG May 16 Fitch is very concerned
that South Africa's economic and political situation is not
improving, the country's second largest federation of trade
unions said on Tuesday after it held talks with the ratings
In April, Fitch cut South Africa's debt to subinvestment,
citing the recent cabinet reshuffle, when President Zuma fired
his third finance minister in two years and which it feared
would weaken standards of governance and public finances.
Firing Pravin Gordhan while he was abroad on an investor
roadshow and the subsequent sovereign downgrade rattled local
markets and investors worldwide.
The Federation of Unions of South Africa's (FEDUSA) General
Secretary Dennis George told Reuters that Fitch said it was also
worried about the lack of progress in reforming state firms.
"They wanted to know how we see the future and what we see
happening at the (ruling African National Congress) ANC elective
conference in December," said George, who was meant to be part
of the contingent accompanying Gordhan overseas on the roadshow.
The ruling ANC elects its next leader, who will contest
national polls in 2019. The cabinet purge that saw Gordhan
removed is seen by analysts as part of a wider power-struggle
between factions in the party jostling for top positions and
control of state-owned entities (SOE).
"Fitch are very concerned about what is happening in the
country and the fact that things are not getting better, they're
getting worse,' George said.
"They also agreed with us that we can't keep bailing out the
state-owned companies," he said.
Government guarantees to state firms are set to increase to
nearly 500 billion rand ($38 billion) in 2017, about a quarter
of the total debt, according to the treasury, which says the
firms represent a significant risk to already stretched
When Fitch downgraded the rating, it said the reshuffle was
likely to "undermine progress in SOE governance", raising the
risk that the firms' debt could migrate onto the government's
Fitch was not immediately available for comment.
(Editing by Louise Ireland)