S&P Global Ratings expects South Africa\u2019s ruling party to continue with policy reforms after the 8 May election, and that\u2019s why it has a stable outlook on the nation\u2019s credit rating.<\/p>\n
\u201cWe think the new administration will continue on the path that they have started,\u201d sovereign analyst Gardner Rusike said Tuesday at a conference in Johannesburg.<\/p>\n
\u201cThe best-case scenario\u201d is that the African National Congress wins and continues with the reforms that it started, he said. \u201cReforms will encourage investment.\u201d<\/p>\n
S&P cut South Africa\u2019s debt assessment to sub-investment grade in April 2017 after former President Jacob Zuma changed the cabinet and appointed a new finance minister and deputy minister.<\/p>\n
After Cyril Ramaphosa replaced Zuma as leader of the ANC and the country, he has taken steps to root out mismanagement at state firms such as power utility Eskom Holdings SOC Ltd. and pledged policy reforms to boost economic growth and lure investment into the country.<\/p>\n
S&P has in the past highlighted slow growth and rising government debt as risks to the nation\u2019s credit rating. While the pace of expansion still remains a concern, the company sees the growth rate doubling to 1.6% this year on improved terms of trade, Rusike said.<\/p>\n
Investment remains South Africa\u2019s \u201cAchilles\u2019 heel\u201d and if that changes, the economy could expand more than 2% in coming years, he said.<\/p>\n
S&P rates South Africa\u2019s foreign-currency debt at BB, two levels below investment grade, and its rand-denominated obligations one step higher.<\/p>\n
The central bank\u2019s role in anchoring inflation, the flexible exchange rate and the role of the judiciary help to support the current rating, Rusike said.<\/p>\n