South Africa will extend more support to the beleaguered state-owned power utility and is considering selling assets as part of a 14-point plan to revive an economy that’s in its second recession in almost a decade, Bloomberg News reported. The country will approach the energy regulator this month about the “hardship” Eskom Holdings SOC Ltd. is dealing with, and will develop a case for “soft support” of the electricity producer until its new tariffs are finalized next year, Finance Minister Malusi Gigaba told reporters in Johannesburg Thursday.
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Ratings agency Fitch is likely to follow rival Standard & Poor’s and cut South Africa’s sovereign credit rating to below investment-grade, analysts said, an outcome that would underscore worries about political uncertainty and prompt a further sell-off in assets, the Irish Times reported. The ratings agency was considering its position as thousands of South Africans took to the streets on Friday to urge President Jacob Zuma to step down after a turbulent week in the wake of his firing of respected finance minister Pravin Gordhan.
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Pravin Gordhan, South Africa’s finance minister, has slashed the country’s growth forecast in half and warned that political turmoil threatens to derail an economic turnround as he battles to stave off a downgrade to junk status, the Financial Times reported. In a budget delivered days before he is due to appear in court on fraud charges, Mr Gordhan said South Africa was “at a crossroad, politically and economically” in defending and reforming public institutions.
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South African Airways, the national carrier, probably incurred a loss for a fifth consecutive year in the past financial period, and would be insolvent without a government-backed guarantee, Bloomberg News reported. The state airline’s loss for the year ending March is estimated at 1.8 billion rand ($124 million), and follows a 4.7 billion loss a year earlier, Finance Minister Pravin Gordhan said in parliament on Tuesday. Gordhan approved a further 4.7 billion rand going-concern guarantee last week that will allow the company to release delayed financial statements on Sept. 15.
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South African Airways, the national carrier, probably incurred a loss for a fifth consecutive year in the past financial period, and would be insolvent without a government-backed guarantee, Bloomberg News reported. The state airline’s loss for the year ending March is estimated at 1.8 billion rand ($124 million), and follows a 4.7 billion loss a year earlier, Finance Minister Pravin Gordhan said in parliament on Tuesday. Gordhan approved a further 4.7 billion rand going-concern guarantee last week that will allow the company to release delayed financial statements on Sept. 15.
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South Africa’s central bank stood by its main interest rate Thursday, as the threat of near-recession outweighed intensifying inflation risks facing the continent’s most developed economy, the Wall Street Journal reported today. South African Reserve Bank Governor Lesetja Kganyago said the risks to growth were too great raise the bank’s main “repo” rate above 7.0 percent. Kganyago has raised rates three times in the past year in an effort to curb inflation that has shot above the bank’s 6 percent target ceiling.
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South Africa will narrowly avoid slipping into recession this year, the International Monetary Fund said, as lackluster leadership and the global commodity rout drag down a longlisting economy, The Wall Street Journal reported. The IMF said Thursday that Africa’s most developed economy will expand just 0.1% this year, down from its previous forecast for a 0.6% expansion. Growth of just 1.1% in 2017 will do little to make up for the a multiyear slump that pushed unemployment and the current-account deficit to record highs.
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South Africa's economy looked set on Tuesday for its first quarterly contraction in a year after measures of business sentiment tumbled, dragged down by shrinking consumer spending that has sunk hopes of a retail-led recovery, Reuters reported. Rising inflation due to severe drought and a weakening currency have triggered a steep rise in lending rates over the past two years, strangling sentiment among businesses and consumers in Africa's most industrialised economy.
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When Pravin Gordhan, South Africa’s finance minister, gives his budget on Wednesday, he not only has to deliver on the task of rebalancing revenues and spending, but also restore the credibility of one of the most traded emerging markets, the Financial Times reported. Analysts say the budget will arguably be the most intensely watched of South Africa’s democratic era as investors seek to gauge the trajectory the country is taking as an economic crisis grips.
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Anglo American said on Tuesday it plans to sell its iron ore, coal and nickel units as part of a sweeping strategic overhaul to cope with a commodities rout that has triggered a fight for survival even among heavyweight miners, the Irish Times reported on a Reuters story. The global mining group plans to concentrate on its De Beers diamond business as well as platinum and copper operations as it dumps loss-making bulk commodities.
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