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ANC risks shift to populist policies: Fitch

The ruling party, African National Congress (ANC)could resort to populist policies to appease dissatisfied voters after losing significant ground in local elections, ratings agency Fitch said on Friday.

“This could include costly spending measures that could require breaching expenditure ceilings or redistributive regulatory policies that might undermine economic growth,” Fitch said in statement.

“Increased in-fighting within the ANC could divert political energies from policy-making,” Fitch said.

It however said it was most likely that the government would continue without major changes to policies.

Fitch and S&P rate South Africa’s sovereign debt a notch above sub investment. Moody’s has the country’s debt two level above speculative grade but with a negative outlook.

Africa’s most industrialised country is on the brink of its first recession after contracting 1.2 percent in the first quarter as key sectors shrunk due to severe drought and falling commodity prices.

South Africa’s ANC was on track for its worst electoral performance since the end of apartheid as voters vented anger about high unemployment and corruption in municipal elections that herald a sea change in politics and society.

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