CAPE TOWN – The National Treasury said on Thursday that the main focus of the government was on South Africa regaining its investment grade status to make the country an attractive investment destination.
The Treasury said this in a statement after Fitch Ratings on Thursday kept South Africa sub-investment grade credit rating steady and maintained its stable outlook.
Fitch, however, warned that low growth and the rising debt of state-owned entities (SOEs) posed a risk, to the country’s economy which has barely grown in the past decade with fiscal missteps and the government corruption contributing to weak business and consumer confidence.
The Treasury said the country’s investment status would be achieved by enhancing policy certainty and credibility, lowering the debt burden as well as restoring good governance and financial stability at public institutions and SOEs.
“Government will continue to engage with all stakeholders in order to fast-track the implementation of growth-enhancing economic reforms. The government would also like to thank all stakeholders whose efforts ensured the affirmation of the sovereign ratings and the stable outlook,” the Treasury said in its statement.
According to Fitch, the rating affirmation and stable outlook are based on the following factors:
- Low growth potential,
- Sizeable government debt and contingent liabilities and
- The risk of rising social tensions due to extremely high inequality.
Meanwhile, the ratings are supported by:
- Strong institutions,
- A favourable government debt structure,
- Deep local capital markets and
- A healthy banking sector.
The Treasury said: “The rating agency has acknowledged policy interventions that government is pursuing in order to reignite economic growth, which include among others, the economic stimulus and recovery plan that was announced by the President in September 2018. Fitch also acknowledged the approval of the revised Mining Charter which is expected to lower uncertainty in the sector.”
BUSINESS REPORT ONLINE