Rob Rose

Chief Reporter

RATINGS agency Fitch said yesterday that SA’s chances of getting a sovereign rating upgrade within the next 18 months were looking good.

Fitch senior director Paul Rawkins praised SA’s economy.

"The budget came in much better than we expected." Any rating upgrade was most likely "within the next eighteen months".

An upgrade from the current investment-grade rating of BBB would make it cheaper for SA’s government to borrow money. It also would encourage foreign investment as foreign investors typically chose countries with higher ratings.

Last October Fitch placed SA’s currency rating on a "positive outlook", suggesting that the country’s overall sovereign rating could be upgraded soon.

In January the largest ratings agency, Moodys Investor Services, upgraded SA to a Baa1, equivalent to a BBB+ and only one notch below the coveted A category.

Standard & Poor’s gave SA a BBB rating in May 2003.

Fitch yesterday released a special report on what it would take to raise the credit profile of sub-Saharan Africa. It said this region should take advantage of the stronger international environment "to build on macroeconomic stability, press ahead with reforms and improve the investment climate".

Fitch’s A category included a number of developing countries, including Chile, South Korea, Malaysia, Israel and Hungary — but not any African countries.

In Africa only Tunisia has the same BBB investment-grade rating as SA.

Most sub-Saharan countries have a B rating, although Fitch director Veronic Kalema said many were making progress by improving their economies, stabilising politically and reducing debt.