It is highly probable that South Africa will receive a sovereign credit rating downgrade to junk status in December 2016 or even earlier if Minister of Finance, Mr Pravin Gordhan, suffers a similar or worse fate than former Minister of Finance, Mr Nhlanhla Nene.

According to Dr Conrad Beyers from the Department of Actuarial Science at the University of Pretoria, it is clear that credit rating agencies regard politically related risks as the single major factor that may influence their rating decisions for South Africa. 'If you scrutinise rating agencies' reports, public statements and assessments on South Africa, political risk currently vastly overshadows all other risks,' Beyers said.

On the positive side, the importance of political risks in South Africa implies that positive Government action can contribute significantly towards creating confidence and can provide reassurance to the business community and rating agencies regarding South Africa's economic prospects. Such positive action by Deputy President Cyril Ramaphosa and Mr Gordhan, in collaboration with prominent South African business figures - the so-called Team South Africa - certainly helped to avert a seemingly inevitable rating downgrade earlier in 2016.

However, the opposite is also true. According to Beyers, a second major shock to the Treasury will likely confirm rating agencies' fears that there is a willingness in key Government circles to sacrifice the country's economic well-being for ulterior motives.

'Team South Africa convinced credit rating agencies that the chaotic exit of Mr Nene in December 2015 was a unique event that will not be repeated, and the rating agencies apparently gave South Africa the benefit of the doubt. However, a similar chaotic exit by Mr Gordhan will illustrate that the 'Nenegate' event was not unique and that more shocks like this are likely in store for the future. In light of the dominance of political risks in credit rating agency assessments of South Africa, a rating downgrade will most likely be a 'no-brainer' in the case of a second irrational shock to the Treasury.'