Fitch Ratings has faced criticism following its analysis suggesting that a coalition between the ANC and the DA would be the best outcome for South Africa.
Fitch Ratings analysis on ANC coalitions
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According to Fitch, the ANC’s lower-than-expected share of the vote means it will need support from either the Democratic Alliance (DA), uMkhonto weSizwe (MK), or the Economic Freedom Fighters (EFF) to govern.
Fitch stated that an arrangement where the DA supports the ANC from outside the government would likely be more feasible than a formal coalition, owing to significant divergences on key issues and historical factors.
“If it was secured, we think support from the DA would probably enable President Cyril Ramaphosa to continue implementing his main priorities, including tackling infrastructure issues,” the ratings agency said.
What Fitch believes is the best possible outcome for South Africa
Fitch believes that support from the DA would enable President Ramaphosa to continue with his main priorities, including tackling infrastructure issues while maintaining policy continuity.
Such an arrangement would likely result in minimal changes to South Africa’s key credit metrics, such as the debt trajectory.
Fitch speculated that the DA would push for fiscal tightening and possibly delay the implementation of the National Health Insurance bill.
In contrast, coalitions with the MK or EFF, which have more radical agendas, would pose greater risks to South Africa’s economic stability and investor confidence.
“We believe an agenda advanced by a government backed by the MK or EFF would be less radical than their campaign platforms might suggest. Moreover, a number of policies proposed by the two parties would require constitutional changes that would be unlikely to pass parliament, in our view, given the outcome of the election,” Fitch assessed.
Reactions to Fitch Ratings pro-DA-ANC coalition analysis
The analysis has sparked backlash, with critics arguing that Fitch’s preference for a DA-ANC coalition overestimates the feasibility of such an alliance and disregards the significant policy differences and historical tensions between the two parties.
The ANC, in a statement following their National Working Committee (NWC) meeting, on Wednesday, reaffirmed their commitment to engaging with all political parties to form a stable government.
“The ANC is committed to ensure that we unite the people of South Africa to move our country forward and form a government that reflects the message from the electorate: we must work together,” the statement read.
The ANC has already held discussions with several parties, including the IFP, EFF, DA, NFP, and PA, while extending an invitation to the MK Party, which has yet to respond positively.