The rating agency further flagged the risk of rising social tensions due to high inequality. The medium-term budget policy framework statement presented in October showed that South Africa’s fiscal buffers were depleted.
The latest National Treasury in October projected that gross debt was stabilising at 59.6percent of gross domestic product (GDP) by 2023/24 following numerous upward revisions.
Tumisho Grater, an economic strategist at Novare, said insight into the country's financial position will likely be revealed in the National Budget speech in February. “Debt servicing costs, contingent liabilities and the public wage bill all need to be met with limited resources. Credit rating agencies are also due to release their credit rating reviews,” Grater said.
“A close eye will also be kept on local politics in the lead-up and outcome of the general elections and what the outcome means for the country and the implementation of the much-needed growth-enhancing reforms.”