Pretoria: The government has acknowledged rating agency Standard and Poor’s (S and P) decision to affirm South Africa’s long-term foreign and local currency debt ratings at ‘BB-‘ and ‘BB’, respectively, while maintaining a positive outlook.
According to South African Government News Agency, S and P stated that the ratings on South Africa benefit from the country’s sizable and sophisticated financial system, which provides a deep funding base for the government. The country is also supported by relatively strong institutions, with effective checks and balances, particularly in its central bank.
However, S and P highlighted that the ratings are constrained by South Africa’s relatively low Gross Domestic Product (GDP) per capita and low GDP growth rates, alongside sizable fiscal deficits and high government debt. Despite these challenges, fiscal consolidation is expected to continue throughout the forecast period, benefitting from access to deep domestic markets and an actively traded currency.
The government
‘s growth strategy remains focused on maintaining macroeconomic stability to reduce living costs and stimulate investment. It aims to execute reforms for a more dynamic economy, enhance state capability in core functions, and support growth-enhancing public infrastructure investment. The fiscal approach seeks to stabilize public finances, mitigate risks in the fiscal framework, encourage economic growth, and support low-income and vulnerable households, according to the National Treasury.