S&P upgrades SA’s credit rating outlook
PRETORIA – The South African government has welcomed S&P Global Ratings decision to revise the country’s credit ranking outlook to positive from stable.
This announcement comes hot on the heels after credit rating agency Moody’s upgraded its outlook on South Africa from negative to stable last month.
Moody’s, explained that South Africa’s fiscal position had markedly recovered from the pandemic, thanks to government’s fiscal consolidation measures and positive external developments, adding that as a result, it looked like government’s debt-toGDP ratio would stabilise around 80 per cent over the medium-term.
Improved
S&P said recent favourable terms of trade in South Africa had improved the external and fiscal trajectory.
The country’s reasonably large net external asset position, flexible currency and deep domestic capital markets are also providing strong buffers against shifts in external financing.
The agency also expects South Africa
to post a current account surplus in 2022 for the third consecutive year, as prices for key metals and mining exports have risen significantly since the start of the Russia-Ukraine conflict.
According to the agency, there has also been some improvement on the implementation of key reform targets under Operation Vulindlela (established in October 2020 as a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms), as well as higher than-expected tax revenue.
Stabilisation
In a statement, National Treasury said government was using a portion of the additional revenue to accelerate debt stabilisation, with the majority targeted at addressing urgent social needs, promoting job creation through the presidential employment initiative, and supporting the public health sector.
It also added that faster implementation of economic reforms, accompanied by fiscal consolidation to provide a stable foundation for growth would support a faster recovery and higher levels of economic growth over the long-term.