Why S&P gave SA a breather
S&P takes a constructive view of the country’s economic reform efforts, forecasting a slow, modest recovery
Anaemic economic growth and sizeable contingent liabilities continue to weigh on SA’s fiscal prospects, but the government’s economic reforms should boost growth modestly from 2019, helping to contain the rise in government debt. This was the encouraging message contained in S&P Global Ratings’ review of SA, released last week. It affirmed SA’s foreign sovereign credit rating at "BB" and didn’t change the outlook to "negative", despite the deterioration in the country’s fiscal position and growth performance. "The stable outlook reflects our view that the SA government will pursue a range of economic, social and fiscal reforms, albeit over an extended period of time," says S&P. The ratings agency expects these measures to boost investor confidence and support economic growth, helping to stabilise public finances over the medium term. This is despite the "significant challenges" SA faces relating to high levels of poverty, unemployment and inequality, coupled with structural impedime...