Update: Treasury welcomes S&P affirming foreign currency sovereign credit rating

National Treasury has welcomes S&P’s decision of maintaining South Africa’s sovereign credit rating with a long-term foreign currency sovereign credit rating of “BB+”, and a long-term local sovereign currency credit ratings of “BBB-” with a “negative” outlook.

S&P said on Friday it was affirming its negative outlook on the foreign and local currency ratings because of political volatility and uncertainty about fiscal policy.

The ratings agency said the pace of economic growth remained “weak, posing risks to the pace of fiscal consolidation, with rising contingent liabilities, and South Africa’s ability to reduce economic inequalities in the medium term”.

Treasury said it also “noted” both the affirmation of the long-term foreign currency rating of “BB+” and the negative outlook on the ratings.

“While government agrees with S&P that the pace of economic growth is slow and as such poses risks to fiscal consolidation and rising contingent liabilities, the fiscal policy stance continues to be guided by chapter 13 of the Constitution,” Treasury said in a statement.

“It states that while there is promotion of efforts aimed at economic development, good governance, social progress and rising standard of living for all South Africans, there must also be transparency, accountability and sound financial controls in the management of public finances.”

Treasury said the key focus was to safeguard confidence and reclaim the investment grade ratings. It said sustainable fiscal policy and efforts to tackle sources of low growth was critical.

“Government is currently re-engaging with the private sector to make sure that the joint work of government, business,
labour and the civil society continues and that the pledges made thus far are fulfilled,” Treasury said.

“The work to improve governance and financial challenges in the state-owned companies (SOCs) is also on track.”

Treasury also said government was committed to work with its social partners in improving business and consumer confidence, adding that the National Development Plan continued to be the anchor policy of government providing greater policy certainty.

“The Constitution remains explicit in realising the fundamental rights of all who live in South Africa and that the public funds are spent for a common good.”

– African News Agency (ANA)

Earlier

Following Thursday’s announcement by Fitch Ratings to keep South Africa’s long-term foreign and local currency bond issue at BB+ with a stable outlook, ratings agency Standard and Poor’s (S&P) has also reaffirmed the countries credit rating at BB+ on Friday.

This is according to a report by EWN on Friday evening.

In April, following the recent changes to the Cabinet by President Jacob Zuma, S&P announced it had downgraded South Africa to sub-investment grade.

The international ratings agency said at the time it was their opinion that “the executive changes initiated by President Zuma have put at risk fiscal and growth outcomes”.

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