example, on appointments of senior SOC management will hamper these efforts Rating agency Fitch has affirmed South Africa’s long-term foreign and local currency debt ratings of ‘BB+’ with a stable outlook, demonstrating that South Africans must continue to act in unison to return the country to investment grade status, National Treasury said on Thursday.
“Government notes the decision of Fitch and expresses gratitude to all the stakeholders who participated in the meetings with the rating agency and ensured that the country is not down-graded further,” Treasury said in a statement.
The rating agency said despite the country’s credit strengths of deep local capital markets, favourable government debt structure and a track record of fairly prudent fiscal and monetary policy, South Africa’s ratings continue to be weighed down by low potential economic growth. It also cited sizable contingent liabilities and deteriorating governance of State-owned companies as issues that weigh down ratings.
According to the rating agency, “the March 2017 Cabinet reshuffle that triggered the downgrade of South Africa’s ratings is likely to undermine governance of State-owned companies (SOCs), weaken fiscal consolidation and reduce private sector investment as a result of weaker business confidence”.
The rating agency is also of the view that “while efforts to improve the SOC governance framework will continue, implementation decisions, for and could lead to weaker financial positions of SOCs and higher contingent liabilities for the government”.
On Thursday, government emphasised that fiscal consolidation remains firmly on track and that government’s efforts remain focused on improving the growth trajectory and policy perceptions.
This comes as Minister Malusi Gigaba is currently re-engaging the private sector to make sure that the joint work of government, business, labour and the civil society continues and that the pledges made thus far are fulfilled.
