S&P has improved SA’s credit rating outlook to positive

S&P has improved SA's credit rating outlook to positive

The government has hailed Standard & Poor’s (S&P) decision to upgrade South Africa’s credit rating outlook from stable to positive, while maintaining its long-term foreign and local currency debt ratings of ‘BB-‘ and ‘BB,’ respectively. According to S&P, South Africa’s external and fiscal trajectory has improved as a result of recent favorable trade terms, while the country’s relatively large net external asset position, flexible currency, and deep domestic capital markets provide strong buffers against shifts in external financing. Furthermore, the agency predicts that South Africa will have a current account surplus for the third year in a row in 2022, as prices for critical metals and mining exports have increased dramatically since the commencement of the Russia-Ukraine conflict.

S&P also noted 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. The National Treasury in a statement said: “As stated in the 2021 Medium Term Budget Policy Statement and 2022 Budget, government is using a portion of the additional revenue to accelerate debt stabilisation, with the majority targeted to address urgent social needs, promote job creation through the presidential employment initiative, and support the public health sector.” The department said 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.

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