Fitch raises red flags over ANC coalition with MK party, EFF

Earlier this year, the ratings agency warned that a significant increase in the government’s debt-to-GDP ratio could knock its credit rating

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Last week’s vote saw the ANC’s support drop from 57.5% of the national vote in 2019 to just over 40% — opening the door for previously undreamed of coalition arrangements. grew its support, albeit slightly, securing 21.81% of the vote. Somewhat surprisingly, at least from a markets perspective, the MK party made a stunning debut — winning 14.58% of the national vote and relegating the EFF to fourth in the polls.

“The various permutations of government could have very different implications for policy, with potentially significant effects for South Africa’s credit profile,” Fitch said in a note on Tuesday. “If it was secured, we think support from the DA would probably enable President Cyril Ramaphosa to continue implementing his main priorities, including tackling infrastructure issues,” Fitch said.

On the other hand, policies proposed by the MK party and the EFF — including wide-scale land expropriation without compensation, the nationalisation of key parts of the economy and halting fiscal consolidation — could force the ANC to make significant concessions, Fitch said.

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