South Africa’s credit rating unchanged in ‘junk’

 ·24 Nov 2018

Ratings firm S&P Global has left South Africa’s sovereign rating unchanged in junk status.

The group announced on Friday that it was holding SA’s long-term foreign-currency rating at ‘BB’, while the long-term local-currency rating stayed at ‘BB+’.

The ratings have a stable outlook.

South Africa’s government, led by president Cyril Ramaphosa, has spent much of the year trying to turn the country’s economy around, particularly by focusing on drawing back investors.

However, it has faced significant hurdles along the way, including the economy slipping into recession, no good news on the unemployment front, and a shock mid-term budget that showed deeper problems with tax collection.

Despite this, S&P expressed some optimism about the future.

“Anaemic economic growth in 2018 and sizeable contingent liabilities continue to weigh on South Africa’s fiscal prospects and debt burden,” S&P said in a statement.

“Nevertheless, the new government is pursuing a series of economic reforms that should help boost the economy from 2019 onward, despite structural impediments, chronic skills shortages and high unemployment.”

Speaking on the land issue, with expropriation without compensation hanging over our collective heads, S&P said that it expects that “the rule of law and enforcement of contracts will largely remain in place and will not significantly hamper investment levels in South Africa”.

South Africa could face a ratings cut if the rule of law is compromised through the policies, the firm warned – but added that the country could get an upgrade if economic growth strengthened.

Read: SA leaders have lost touch with how ordinary South Africans are battling

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