Cape Town 16.01.11 ANC meeting at, Landbou Saal in Piketberg picture : neil baynes

Cape Town - A drop in support for South Africa’s ruling African National Congress below 60 percent in this year’s election may trigger a “populist backlash,” increasing the risk of a credit-rating downgrade, Citigroup Inc. said.

While the ANC is likely to retain more than 60 percent of the vote, the possibility that the party’s support falls below this “isn’t small,” Citigroup Inc. analyst Gina Schoeman said in an e-mailed report today.

The ANC has been in power since South Africa’s first multiracial election in 1994 and won 66 percent of the vote in the last national election five years ago.

Its nearest rival, the Democratic Alliance, won 17 percent.

An opinion poll conducted in November by Johannesburg-based research company Ipsos showed the ANC’s support had dropped by 10 percentage points to 53 percent in the past year.

“Our base case is that the ANC loses support, but remains above the 60 percent majority,” Schoeman said.

“If instead, ANC votes fall below 60% of the total, the risk of populist backlash could rise, increasing the risk of another sovereign-ratings downgrade and further rand weakness. All this would make fiscal and monetary policy that more difficult to read.”

The rand has slumped 22 percent against the dollar since the beginning of last year, the worst performer of 16 major currencies tracked by Bloomberg.

It was trading at 10.8984 as of 12 p.m. in Johannesburg.

The ANC’s support has waned amid voter disenchantment with a 25 percent unemployment rate and a series of corruption scandals.

Moody’s Investors Service downgraded South Africa’s credit rating in September 2012, followed by Fitch Ratings and Standard & Poor’s. - Bloomberg News