SA still needs "significant transformation", but it would take place more effectively in a faster-growing economy, wherein the Treasury had more flexibility in its spending choices and "investor sentiment [was] on our side", says Konrad Reuss, S&P Global Ratings MD for sub-Saharan Africa. Policy makers had to be aware of SA’s vulnerability, Reuss said on Thursday, referring to the fact foreign investors held more than 35% of the government’s rand-denominated debt. "If they decide they do not want to [invest] in SA, we would have [large] outflows." SA’s bond market has enjoyed considerable inflows in 2017, amid a global search for yield that has favoured emerging markets. But if S&P and Moody’s downgrade the country’s local-currency rating to junk, SA would fall out of major global bond indices and could see as much as R130bn-R190bn flowing out of its bond markets. S&P, which junked SA’s foreign-currency denominated debt in April, was looking for structural reforms that would enhance...

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