Pretoria - The National Treasury says Fitch’s decision to affirm South Africa’s economic outlook is fair, given the tough global economic climate.
In a statement, the National Treasury said amongst the factors that influenced the affirmation of South Africa’s rating included a strong banking system and deep local financial markets.
Fitch affirmed the country’s long term foreign and local currency Issuer Default Ratings (IDRs) at ‘BBB’ and ‘BBB+’ respectively.
“The ratings agency said that government debt was largely denominated in local currency and has a high average maturity and this limited exchange rate and financing risk.
“Fitch also indicated that weak economic growth and a widening current account deficit were downside drivers preventing the economy from achieving a more positive rating.
“The National Treasury considers Fitch's decision fair in view of the global economic climate and the South African government's commitment to its counter cyclical fiscal policy stance.”
The counter-cyclical approach was one of the toughest decisions that government took to survive the aftermath of the 2008 recession. Government did this by allowing the budget deficit to increase during bad times, before reigning it in when times improved.
“As set out in the 2013 Medium Term Budget Policy Statement, government’s fiscal framework is aimed at reprioritising expenditure and revenue, while providing support to the economy and strengthening infrastructure investment for sustainable long-term growth across all critical sectors of the economy.”
“The South African government is committed to consistently making efforts to address the concerns identified in Fitch’s rating review which is aimed at improving investor confidence.” – SAnews.gov.za
