Cyril Ramaphosa needs time to stabilise public finances, S&P says
S&P Global Ratings says SA’s credit rating and outlook has not been immediately affected by political developments surrounding the resignation of Jacob Zuma. The credit-ratings agency’s last report in November flagged SA’s fiscal and economic challenges.
"The new leadership could bring confidence and faster implementation of key reforms already undertaken," S&P said in a statement on Thursday. However, it added that President Cyril Ramaphosa and his administration would need time to implement measures to improve economic growth and stabilise public finances, in the light of SA’s structural and institutional challenges.
SA’s economic growth has remained low and is expected to have been less than 1% in 2017. The figures will be released in March.
"We think the government will attempt to introduce offsetting measures in an effort to improve budgetary outcomes, but these may not be sufficient to stabilise public finances in the near term," S&P said.
S&P added that based on the political developments, no rating actions were warranted currently.
This comes after Moody’s said it would pay close attention to the new leadership’s response to SA’s economic woes. Zuzana Brixiova, vice-president at Moody’s, said in a statement: "Moody’s is closely monitoring developments in SA and is focused on the policy implications of ongoing changes in leadership.
"The key point from a credit perspective will be the new leadership’s response to the country’s economic and fiscal challenges and progress in implementing reforms addressing them," she added.
S&P downgraded SA in November after the medium-term budget policy statement. SA’s credit rating with Moody’s is one notch above junk status. While Moody’s has not confirmed when it will review SA again, it is likely to be after the 2018 budget policy statement next week.