Fitch Ratings on April 7 downgraded South Africa to junk status following the removal of Pravin Gordhan as finance minister and the enusing political crisis.

Fitch's downgrade to 'BB+' from 'BBB-' on both foreign and local currency debt follows a similar downgrade earlier in the week to junk for the first time in 17 years by Standard & Poor’s, which cut South Africa's sovereign rating to 'BB+' from 'BBB-' and the long-term local currency rating to 'BBB-' from 'BBB', both with a negative outlook. At the same time, Moody's Investors Service also placed its 'Baa2' long-term issuer and senior unsecured bond ratings of the government of South Africa on review for a downgrade, saying the decision to initiate a review for downgrade was prompted by the abrupt change in leadership of key government institutions.

A downgrade by two of the major rating agencies, with a third almost certain, means that South Africa could drop out of some widely used global bond indices and force international funds which track them or which are prohibited from holding sub-investment grade securities to sell. The rand has fallen more than 11% since March 27 when President Jacob Zuma recalled Gordhan from a foreign trip to fire him.

“In Fitch’s view, the cabinet reshuffle, which involved the replacement of Gordhan, and the deputy Mcebisi Jonas, is likely to result in a change in the direction of economic policy,” Fitch said.

According to Fitch, Gordhan could have been fired in an effort to raise President Jacob Zuma and his allies’ hold over state companies. could result in a major burden on the state’s balance sheet. The previous finance minister had attempted to clean up the state companies and prevent their use as sources of corruption.

“The reshuffle partly reflected efforts by the out-going finance minister to improve the governance of state-owned enterprises,” Fitch said.