JOHANNESBURG – Ratings agency Standard & Poor's has downgraded to junk its credit grade for South Africa.
The downgrade is a blow as it signals to the world that South Africa any investment is at high risk. It could also affect South Africa's public finances by making it more expensive for the government to raise money.
The S&P action is in response to South African President Jacob Zuma's announcement Friday that he fired finance minister Pravin Gordhan.
In a report published Monday, S&P said the downgrade "reflects our view that the divisions in the ANC-led government that have led to changes in the executive leadership, including the finance minister, have put policy continuity at risk."
It says that this means South Africa's economic growth and public finances could suffer.