Fitch said on Friday it had kept the country’s rating at BBB- but the outlook had been dropped due to the fact that political risks to standards of governance and policy-making had increased and would remain high at least until the electoral conference of the ANC in December 2017‚ negatively affecting macroeconomic performance.

“The ANC will elect a new leader‚ who will be the ANC’s presidential candidate in national elections in 2019.”

The agency said in-fighting within the ANC and government was likely to continue over the next year and its view was that this would “distract policymakers and lead to mixed messages that will continue to undermine the investment climate‚ thereby constraining GDP growth”.

While the decision not to downgrade provides some relief‚ analysts have warned that changes to outlooks by other agencies may result in S& P Global Ratings downgrading SA to junk next week.

A downgrade to junk is potentially catastrophic. It would mean many investment funds would be obliged to pull investment from the country.

SA has been on tenterhooks about its ratings for the past year‚ having narrowly escaped downgrades twice‚ about six months ago and a year ago.

Agencies have repeatedly raised their concern about the need for structural reforms to remove impediments to higher growth in SA.

The Reserve Bank’s latest forecasts for growth‚ at its announcement on Thursday that it was leaving interest rates unchanged‚ were unchanged from the September monetary policy committee meeting.

Growth of 0.4% is forecast for 2016‚ picking up to 1.2% in 2017 and 1.6% in 2018.

The rating agencies have cited instability and inflexibility in the labour market‚ policy uncertainty and a toxic political environment among their concerns.

Finance Minister Pravin Gordhan has been instrumental in the efforts to convince the agencies that SA is doing what needs to be done to put it on a higher growth trajectory‚ and to address concern about corruption at the highest levels of government.

The fraud charges instituted against him‚ and then withdrawn‚ and the allegations contained in former public protector Thuli Madonsela’s State of Capture report‚ have only added to the concern about the direction SA is headed.

President Jacob Zuma this week bemoaned the “politicisation” of the rating agencies’ decision.

However‚ SA’s institutions — especially its courts — and civil society have been lauded as a positive factor.

S& P‚ which said earlier this month that SA needed to make better progress on the areas of concern‚ said it rated SA’s institutions as neutral‚ because checks and balances were enforced by the courts rather than other arms of the state.

Some progress has been made on economic reforms‚ however.

The Treasury‚ in its medium-term budget policy statement‚ announced further belt-tightening and plans to raise taxes to ensure net debt stabilises below 50% of GDP‚ despite slower growth.

In Nedlac‚ broad agreement has been reached on a package of labour stability reforms that organised business is optimistic will reduce violent and protracted strikes and heralds a more constructive era of labour relations.

But many economists doubt this is enough to stave off further downgrades.

This time last year

In December 2015‚ just as rating agencies were preparing their reviews of SA‚ “Nenegate” broke‚ when Zuma fired Nhlanhla Nene as finance minister and replaced him with the little-known Des van Rooyen. That decision was reversed after the outcry that followed‚ and Gordhan was installed as finance minister.

About a week after that‚ Moody’s issued its rating review‚ maintaining the rating but cutting the outlook to negative from stable.

In June‚ all three agencies affirmed SA’s ratings‚ but Moody’s was the only one to offer an overwhelmingly positive assessment of the economy and the Treasury’s ability to return SA to fiscal stability and reignite growth.

Moody’s is expected to release its review on the country later this evening.

— BusinessLIVE with Claire Bissker and AFP