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National Treasury welcomes revised credit rating by S&P to positive

National Treasury says the revised outlook by rating agency showed South Africa was on the right track. Picture Henk Kruger/African News Agency (ANA) Archives

National Treasury says the revised outlook by rating agency showed South Africa was on the right track. Picture Henk Kruger/African News Agency (ANA) Archives

Published May 21, 2022

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Cape Town - National Treasury has welcomed South Africa’s revised credit rating by S&P Global Ratings to positive, saying this followed structural reforms in the economy, current account surplus and other initiatives to boost the economy.

S&P had previously placed South Africa’s credit rating to stable, but on Friday it moved it to positive.

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This was because of several measures by the government to ensure economic growth.

But in addition, the government has fast-tracked some of the initiatives to cut red tape and bottlenecks in the system to allow for the economy to grow.

This would ensure more jobs were created.

Finance Minister Enoch Godongwana recently tabled a report on progress made in implementing structural reforms to boost the economy.

He said one of the challenges was to resolve the energy crisis by lifting the licence threshold to 100MW for embedded generation.

The other reforms they implemented was the sale of the spectrum which netted the government R8 billion.

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The government was now inviting third parties to use the railway and this could draw more than R58 billion.

National Treasury said the decision by S&P showed South Africa was on the right track.

“According to S&P, recent favourable terms of trade in South Africa have improved the external and fiscal trajectory, while the country’s reasonably large net external asset position, flexible currency and deep domestic capital markets provide strong buffers against shifts in external financing. In addition, the agency expects South Africa to post a current account surplus in 2022 for the third consecutive year, as prices for key metals and mining exports have risen significantly since the start of the Russia-Ukraine conflict,” said National Treasury.

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It added that the implementation of structural reforms has improved. This is accompanied by higher than expected revenue collected.

National Treasury said government used additional revenue to stabilise debt, create jobs and social support measures.

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