SA disagrees with S&P downgrade

Thursday, March 29, 2012

Pretoria - National Treasury says it disagrees with rating agency Standard and Poor's (S&P) assessment, which downgraded South Africa's outlook from stable to negative.

S&P on Wednesday revised the outlook on its BBB+ sovereign credit rating for South Africa, to negative from stable after its assessment of "political risk" in South Africa.

"We disagree with the assessment of the political risk in South Africa. Political debate and a vigorous exchange of ideas on policy options are part and parcel of the fibre of a democratic dispensation. This cannot be construed as political instability," Treasury said in statement.

The ministry re-emphasised that the 2012 Budget was tabled against the backdrop of an uncertain global economy, despite South Africa's continued resilience.

During the Budget Speech, Finance Minister Pravin Gordhan had indicated the budget deficit was projected to decline to 3% of GDP over the medium term and net government debt was expected to peak at 38.5% of GDP in 2014/15.

This was consistent with government's commitment to fiscal consolidation over the medium term.

"The 2012 Budget balances the support to the economy with a gradual consolidation of South Africa's fiscal path to ensure sustainable public finances," Treasury said.

The 2012 Budget had identified a number of levers to activate both public and private sector capabilities, such as massive public sector infrastructure programme, support for industrial development and special economic zones; the expansion of employment programmes; and improvements in further education and skills development.

"The South African government will continue to place higher economic growth and job creation at the core of its economic policy, within a transparent investment and sustainable fiscal framework," said Treasury.