The rating agency downgraded South Africa’s debt assessment to sub-investment grade in April 2017 after former President Jacob Zuma changed the cabinet and appointed a new finance minister and deputy minister.
Tuesday 09, April 2019
(Bloomberg) --S&P Global Ratings has affirmed a stable outlook on South Africa’s credit rating, expecting that the Southern Africa nation will continue with policy reforms after the 8 May election.
Gardner Rusike, S&P Sovereign Analyst, said, “We think the new administration will continue on the path that they have started, the best-case scenario is that the African National Congress (ANC) wins and continues with the reforms that it started and reforms will encourage investment.”
After Cyril Ramaphosa replaced Zuma as leader of the ANC and the country, he has taken steps to root out mismanagement at state firms such as power utility Eskom Holdings and pledged policy reforms to boost economic growth and lure investment into the country.
S&P has in the past highlighted slow growth and rising government debt as risks to the nation’s credit rating. While the pace of expansion still remains a concern, the company sees the growth rate doubling to 1.6 per cent this year on improved terms of trade, Rusike said.
The rating agency rates South Africa’s foreign-currency debt at BB, two levels below investment grade and its rand-denominated obligations one step higher. Rusike added that the central bank’s role in anchoring inflation, the flexible exchange rate and the role of the judiciary help to support the current rating.