Trump arrives in Italy to meet Pope Francis, Italian leaders
ROME U.S. President Donald Trump arrived in Italy on Tuesday ahead of meetings with Pope Francis and Italian leaders, on the third leg of his first international trip since taking office.
JOHANNESBURG Standard & Poor's cut South Africa's credit rating one notch on Friday to BBB with a negative outlook, saying mining strikes and social tensions could reduce fiscal flexibility and hurt growth in the continent's biggest economy.
The Treasury hit back, saying its spending plans were "realistic and achievable" and that there was no historical evidence from the 18 years since the end of apartheid to support S&P's assertions.
"Our young democracy has seen several elections within the ruling party and government. None of these have impacted policy and budgeting in the manner that S&P suggests," it said in a statement.
"Government will continue to invest in infrastructure with the view of enhancing the productive capacity of our economy and the competitiveness of our industries. This will be done in a manner consistent with fiscal sustainability."
The rand, which fell to a 3-1/2 year low on Monday amid concerns about the impact to growth of mining and trucker strikes, shed nearly one percent against the dollar after the S&P cut.
It was trading at 8.75 at 1737 GMT, from 8.65 just before the announcement.
S&P's downgrade from BBB-plus takes it one notch below both Moody's Investors Service's Baa1 rating with a negative outlook as well as Fitch Ratings' BBB-plus rating, also with a negative outlook.
"The negative outlook reflects our view that the medium-term political, economic and fiscal ramifications of South Africa's social tensions could deteriorate beyond our current expectations," S&P said.
"We expect underlying social tensions may result in amplified spending pressures and reduce fiscal flexibility for the government."
Finance Minister Pravin Gordhan will present his interim budget to parliament on October 25.
In particular, S&P said mining strikes could influence political debate ahead of 2014 elections and "may increase uncertainties related to the African National Congress' (ANC) future policy framework."
Before the 2014 election, the ruling ANC has to negotiate a potentially divisive internal leadership election in December
S&P added that it sees South African growth softening to around 2.5 percent in 2012 and the budget deficit increasing to at least 5.1 percent of output.
Large parts of the platinum and gold mining sectors have been brought to a standstill by wildcat strikes that started in early August and intensified after the police killing of 34 strikers at Lonmin's Marikana platinum mine on August 16.
However, a nearly three-week trucker strike that hit fuel supplies to major cities and some factory production came to an end on Friday when workers and freight bosses agreed a three-year wage settlement.
The bond market was closed when the S&P statement landed, but is likely to take a dive when it reopens on Monday.
South African domestic debt has been heavily supported this year by its inclusion from October 1 in Citi's influential World Government Bond Index (WGBI), a benchmark tracked by billions of dollars globally.
Analysts said the WGBI membership was not at stake.
"Although the rand has understandably reacted negatively to the news, this does not impact on South Africa's WGBI eligibility," said Razia Khan, head of Africa research at Standard Chartered in London.
"That would require the country's rating to be cut to below investment grade by at least two separate ratings agencies, which would imply a further two notch downgrade by S&P, and three notch downgrades by Moody's and Fitch."
(Writing by Stella Mapenzauswa and Ed Cropley; editing by Ron Askew)
SEOUL South Korea's military fired warning shots at a suspected drone from North Korea on Tuesday amid tension over Pyongyang's latest missile test which drew international condemnation and a warning from China.
JERUSALEM President Donald Trump used his centerpiece Holy Land speech on Tuesday to reaffirm his commitment to peace between Israelis and Palestinians, but he offered no new details on how to achieve a goal that has eluded U.S. leaders for decades.