South Africa: S&P confirms BBB-/A-3 with stable perspective

Jun 16, 2015

The rating agency published its communiqué on June 12th concerning sovereign long & medium term foreign currency debt.

This announcement is reassuring, after several successive downgrades of the rating of South Africa by all three agencies. Standard & Poor's explains that the country "will continue to experience political stability and maintain fairly strong political institutions", which is indeed confirmed after numerous months of social strikes.

Although government efforts on economic reforms are stressed to be “limited”, the agency plans an acceleration of GDP growth to an average of 2.7% per year over the period 2016 to 2018 (from 2.1% in 2015). The growth will be fueled by an increase in electricity production, a recovery in domestic consumption and an increase in exports.

"Current account deficit financing needs are higher than ever," the agency said. It expects the public debt to reach 44% of GDP in 2017, against 41% in 2014 and 22% in 2008. However, it considers that the financial market is deep enough not to degrade the country's prospects. Note that the local money sovereign debt rating remains unchanged at BBB + / A-2.ADNFCR-2976-ID-801791219-ADNFCR