Director-General of the National Treasury, Duncan Pieterse, says global rating agency Standard and Poor’s (S&P) decision to affirm South Africa’s global rating is a sign that government is meeting its commitment to lower the debt-to-GDP ratio over the medium term while steadying public finances.
S&P affirmed South Africa’s long-term foreign currency sovereign credit rating at ‘BB’ and local currency rating at ‘BB+’ and to maintain the positive outlook.
“The affirmation from S&P that government is on track to deliver on its commitment to reduce the debt to GDP ratio over the medium term reflects the progress we have made towards restoring the health of South Africa’s public finances, and our ability to continue to do so despite geopolitical upheavals.
“Two of the major rating agencies, S&P and Moody’s, now have South Africa on a positive outlook, which is an encouraging signal that we have the potential to lift our economic growth rate higher and reduce our public debt faster. We are determined to do so,” Pieterse said.
National Treasury said the outlook reflects “scope for further fiscal improvement and debt stabilisation, conditional on continued consolidation and an easing of the current energy-price shock”.
“The rating decision also recognises stronger revenue performance, which has enabled the government to maintain fiscal discipline while implementing targeted measures to protect vulnerable households, including the temporary fuel levy relief in response to elevated global energy prices.
“These interventions have been implemented in a manner that remains consistent with the existing fiscal framework and does not compromise the medium-term consolidation path,” the department said.
The global ratings agency also noted the acceleration of Operation Vulindlela, government’s structural reform path aimed addressing constraints in electricity, infrastructure delivery and logistics.
It also noted that South Africa’s economic growth remains moderate in the near term in conditions of global headwinds and tight financial conditions.
“The retention of a positive outlook comes in a context in which 23 sovereigns’ S&P ratings have been negatively impacted since the start of the current Middle East conflict in late February, including 14 investment-grade sovereigns. South Africa is currently one of only two G20 nations, alongside Italy, on a positive outlook from S&P.
“The government remains committed to maintaining prudent fiscal policy, strengthening the credibility of the fiscal framework, and accelerating reforms that support higher growth, job creation, and improved service delivery.
“The government is developing a principles-based fiscal anchor to reinforce the credibility and durability of the fiscal framework,” National Treasury said. – SAnews.gov.za
