- Many African ratings weren't upgraded amid growth boom
- More weak South Africa GDP may raise questions on fiscal goal
Standard & Poor’s said there isn’t major risk of a rush to downgrade African debt amid a slowdown in China because credit ratings weren’t improved substantially during a growth boom in recent years.
“We didn’t give them the benefit of the doubt in upgrading them then,” Konrad Reuss, Standard & Poor’s Managing Director for South Africa and sub-Saharan Africa, said in an interview in Zambia’s capital, Lusaka. “So we don’t see, at least at this point, if the policy responses are prudent to the changing environment, that we need to rush through many more downgrades.”
S&P has downgraded oil producers such as Nigeria, Angola, Gabon and Ghana in the past year as plunging crude prices threatened governments’ finances.
African currencies are trading near all-time lows amid a slowdown in China, Africa’s biggest trading partner, and a slump in commodity prices.
“We’ve adjusted a number of ratings earlier this year,” Reuss said. African ratings have “gone through a number of adjustments.”
Economic growth in sub-Saharan Africa will probably slow to 3.5 percent this year, compared with an average of 5.5 percent between 2000 and last year, Renaissance Capital economist Yvonne Mhango said in a note on Aug. 28.
South Africa’s economy, the continent’s second-largest, contracted for the first time in more than a year in the three months through June. Another quarter of weak economic performance would raise questions about the government’s fiscal target, Reuss said. S&P left the nation’s credit rating at BBB-, with a stable outlook, in June.