Govt vows to continue growth push as S&P maintains a positive outlook on South Africa
National Treasury says that government’s growth strategy will continue to focus on maintaining macroeconomic stability to reduce living costs and grow investment, executing reforms to promote a more dynamic economy, building State capability in core functions and supporting growth-enhancing public infrastructure investment
Following S&P Global Ratings’ decision to affirm South Africa’s long-term foreign and local currency debt ratings at ‘BB-’ and ‘BB’, respectively, and maintain the positive outlook, government’s growth strategy will continue to focus on maintaining macroeconomic stability to reduce living costs and grow investment, executing reforms to promote a more dynamic economy, building State capability in core functions and supporting growth-enhancing public infrastructure investment.
“The fiscal strategy continues to strike a balance between stabilising the public finances, reducing risks in the fiscal framework, encouraging economic growth and supporting low income and vulnerable households,” the National Treasury says in a May 16 statement.
According to S&P, the ratings on South Africa benefit from the country’s sizable and sophisticated financial system that provides a deep funding base for the government.
The country also has relatively strong institutions, with good checks and balances, particularly its central bank.
However, S&P says the ratings are constrained by relatively low GDP per capita and low GDP growth rates, as well as sizeable fiscal deficits and high government debt.
According to S&P, despite the re-tabling of the National Budget and the likely removal of mooted value-added tax increases, fiscal consolidation is planned to continue throughout the forecast period, and fiscal financing benefits from access to deep domestic markets and an actively traded currency.
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