The AU’s African Peer Review Mechanism (APRM) has denounced ratings agency Fitch for what it sees as inappropriate attempts to manipulate SA’s internal politics by suggesting that the ANC tie up with the DA to form a government.
The APRM, designed to advance AU ideals of democratic governance and inclusive development in member states, was reacting to Fitch’s statement last week, highlighting risks to SA’s credit profile after the election.
The APRM was offended by Fitch saying DA support for the ANC from outside government was likelier. If that was secured, “we think support from the DA would probably enable President Cyril Ramaphosa to continue implementing his main priorities, including tackling infrastructure issues”, said Fitch.
The agency said that SA’s debt trajectory would face additional risks if the ANC entered into arrangements that “rely on support from the MK or EFF. This outcome could also pose additional challenges to macroeconomic stability, for example if it led to a broad weakening of investor confidence or eroded governance.”
The APRM said these statements were aimed at influencing the outcome of coalition talks between SA political parties, and that Fitch acted hastily.
“Given the influence that Fitch Ratings command in the global financial markets, the APRM views the comments ... as politically motivated and tantamount to political interference in the internal political affairs of an AU member state,” said APRM.
“This is especially important considering that the commentary has been issued amid ongoing negotiations by political parties to form a coalition government or a government of national unity ... As a global financial institution, Fitch Ratings should conduct itself as an independent and nonpolitical institution.
“The APRM views this comment by Fitch as premature and unsubstantiated. Fitch should have waited for the outcomes of the ongoing negotiations by political parties and the resulting policy choices to make conclusions that are based on facts and informed analysis.”
Fitch did not respond to questions related to APRM’s rebuke. It instead referred Business Day to its previous statement.
Former president Thabo Mbeki was the central architect of the New Partnership for Africa’s Development and, as the inaugural chair of the AU, spearheaded the introduction of the APRM in the early 2000s.
The ANC’s national executive committee, its highest decision-making structure between conferences, last week resolved to form a national unity government with major opposition parties after it lost its majority for the first time.
The DA and IFP have responded positively to the proposal, with discussions continuing. The country’s third- and fourth-biggest parties, the EFF and Jacob Zuma’s MK party, have so far thrown cold water on the ANC’s proposal.
Fitch in January affirmed SA’s long-term foreign and local currency debt ratings at BB- and maintained the stable outlook. At the time, the agency said the country’s credit rating was constrained by low real GDP growth, a high level of inequality, a high and rising government debt-to-GDP ratio, and a modest path of fiscal consolidation.
Fitch is likely to give its rating decision on SA later this month.
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