National Treasury says S&P\u2019s latest rating decision on South Africa affords the country an opportunity to demonstrate that it can successfully implement measures to turn the tide on sluggish growth.<\/p>\n
\u201cThese measures include the reprioritisation of public spending, the creation of the infrastructure fund as well as partnerships for growth,\u201d said Treasury in the wake of the decision by S&P to affirm South Africa\u2019s long-term foreign and local currency debt ratings at \u2018BB\u2019 and \u2018BB+\u2019 respectively, and maintain a stable outlook.<\/p>\n
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\u2019s fiscal prospects; and the \u201cnew 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\u201d.<\/p>\n
Treasury said the stable outlook reflects S&P\u2019s view that \u201cthe South African government will pursue a range of economic, social and fiscal reforms, albeit over an extended period of time\u201d.<\/p>\n
S&P now expects South Africa\u2019s gross domestic product (GDP) growth to average 0.8% in 2018 and 1.8% in 2019. These forecasts are slightly higher than the 2018 MTBPS [Medium Term Budget Policy Statement] assumptions.<\/p>\n
Treasury noted S&P\u2019s assessment of challenges and opportunities the country faces in the immediate to long-term, and said it remains determined to achieve improved ratings in the period ahead.
\nS&P has highlighted a number of risks, including subdued economic growth, which could lead to the rating being lowered.<\/p>\n
\u201cGovernment is mindful of these and fully aware that the next several months are critical,\u201d said Treasury.<\/p>\n
Laying the foundation for a turnaround<\/strong><\/p>\n Since the tabling of the 2018 Budget in Parliament, government has sought to reduce policy uncertainty and restore investor confidence by:<\/p>\n To place public finances on a more sustainable path and contain the rising contingent liabilities, government has initiated measures to restore good governance and financial stability at State-owned companies (SOCs) as follows:<\/p>\n To position South Africa as an attractive investment destination, government will enhance its collaboration with business, labour and civil society. Another objective of collaboration with other stakeholders would be the creation of an enabling policy environment for inclusive economic growth, Treasury said.<\/p>\n\n
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