SOUTH AFRICA MOVES CLOSER TO JUNK STATUS WITH DOWNGRADE
By Antonio Guerrero
South Africa’s weakened economy pushed it closer into junk territory, as Fitch Ratings further downgraded its sovereign rating in January.
The agency cut the country’s long-term rating to BBB from BBB+, with a stable outlook. The downgrade puts it just two notches above junk grade. Among Fitch’s rationale for the ratings action was South Africa’s 2.2% average GDP growth over the past five years, labor unrest, policy uncertainty over calls for nationalizing mining companies, and a debt-to-GDP ratio that rose from 27% in 2008 to 41% in 2012.
Gulf Finance House, a Bahrain investment bank, is investing $3 billion to build North Africa’s first offshore financial center, to be located in Tunisia. The project is expected to create 16,000 jobs and comes two years after a political revolution in Tunisia halted economic growth.
The Zambian government redenominated the country’s currency, the kwacha, removing three zeroes from previous denominations. Both new and old denominations will remain in circulation until June 30, after which only new bills and coins will be valid. Finance minister Alexander Chikwanda said the move is aimed at addressing the country’s inflationary spikes that have prompted sharp currency devaluations.