CAPE TOWN – The National Treasury has said that S&P Global’s latest rating decision on South Africa afforded the country an opportunity to demonstrate that it can successfully implement measures to turn the tide on sluggish growth.
“These measures include the reprioritisation of public spending, the creation of the infrastructure fund as well as partnerships for growth,” said Treasury in the wake of the decision by S&P to affirm South Africa’s long-term foreign and local currency debt ratings at ‘BB’ and ‘BB+’ respectively, and maintain a stable outlook.
According to S&P, the rating affirmation is underpinned by the following drivers: anaemic economic growth in 2018 and high contingent liabilities continue to weigh on South Africa’s fiscal prospects; and the “new government is pursuing a series of economic reforms that should help boost the economy from 2019, despite structural impediments, chronic skills shortages, and high unemployment”.
Treasury said the stable outlook reflects S&P’s view that “the South African government will pursue a range of economic, social and fiscal reforms, albeit over an extended period of time”.
S&P now expects South Africa’s gross domestic product (GDP) growth to average 0.8 percent in 2018 and 1.8 percent in 2019. These forecasts are slightly higher than the 2018 MTBPS (Medium Term Budget Policy Statement) assumptions.