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<\/a><\/figure>\n\n\n\nSouth Africa moving up<\/h2>\n\n\n\n
South Africa is still on track to lower its debt-to-gross domestic product ratio, despite disruptions caused by the war in Iran, Pieterse said. <\/p>\n\n\n\n
A sustained drop would mark the first time in 17 years. The Treasury projects the measure will peak at 77.3% in the current fiscal year.<\/p>\n\n\n\n
Not everyone is convinced. The International Monetary Fund forecast in April that the ratio would continue to rise to 79.7% of GDP next year.<\/p>\n\n\n\n
\u201cThere are some definitional differences which matter less now,\u201d Pieterse said. <\/p>\n\n\n\n
\u201cBasically, they are saying that debt is not going to stabilise, and so I guess we\u2019ll settle that debate in February,\u201d he said, referring to the annual budget statement scheduled for release that month.<\/p>\n\n\n\n
To ensure fiscal sustainability, the government plans to introduce a \u201cprinciples-based\u201d fiscal rule with spending targets enshrined in law. <\/p>\n\n\n\n
Yet even without such an anchor, the current administration has managed to grow the primary budget surplus\u2014which excludes interest costs\u2014and stabilise debt.<\/p>\n\n\n\n
The country has already reached its foreign-currency borrowing target for the year through a mix of bonds and loans from multilateral institutions. <\/p>\n\n\n\n
While lower borrowing costs may look like a good time to take on more debt, the government won\u2019t issue foreign bonds opportunistically, Pieterse said.\u00a0<\/p>\n\n\n\n
\u201cThe only reason you would do that is if you don\u2019t believe that next year you\u2019re going to be in an even better position, which we believe,\u201d he said. <\/p>\n\n\n\n
\u201cThat\u2019s the point of how fiscal credibility works: as you continuously execute on it, your borrowing possibilities improve over time.\u201d<\/p>\n\n\n\n
Pieterse declined to predict when South Africa might regain its investment-grade status, but said the Treasury had been proactive about communicating with the ratings companies, while building a track record of fiscal consolidation.<\/p>\n\n\n\n
Bond investors are \u201cvery good at assessing\u201d sovereign risk in real time, he said. <\/p>\n\n\n\n
While borrowing costs rose steeply after the outbreak of the Iran war, the benchmark 10-year government yield has been falling since the end of March and is now more than a percentage point lower than a year ago.<\/p>\n\n\n\n
\u201cOur interest is not in when exactly rating agencies would respond,\u201d Pieterse said. <\/p>\n\n\n\n