S&P sees SA policy reforms continuing after election

Affirms its stable outlook on the nation’s credit rating.
The pace of SA's economic expansion remains a concern, but S&P sees the growth rate doubling to 1.6% this year on improved terms of trade, sovereign analyst Gardner Rusike says. Picture: Moneyweb

S&P Global Ratings expects South Africa’s ruling party to continue with policy reforms after the May 8 election, and that’s why it has a stable outlook on the nation’s credit rating.

“We think the new administration will continue on the path that they have started,” sovereign analyst Gardner Rusike said Tuesday at a conference in Johannesburg. “The best-case scenario” is that the African National Congress wins and continues with the reforms that it started, he said. “Reforms will encourage investment.”

S&P cut 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. 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 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% this year on improved terms of trade, Rusike said. Investment remains South Africa’s “Achilles’ heel” and if that changes, the economy could expand more than 2% in coming years, he said.

S&P rates South Africa’s foreign-currency debt at BB, two levels below investment grade, and its rand-denominated obligations one step higher. The central bank’s role in anchoring inflation, the flexible exchange rate and the role of the judiciary help to support the current rating, Rusike said.

© 2019 Bloomberg L.P


Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.


The Zondo commission provides proof that the governing party is rotten to the core. The ANC, as the government, is a criminal organization with a credit rating.

Look, I am a citizen and a taxpayer, I want only the best for the country, but for the ANC to do what S&P expects of them, they will have to turn into the DA. The ANC has a manifesto of plunder. Their “mission statement” is one of universal plunder and the destruction of public assets. How can anyone expect such an organization to root out corruption when every supporter of this party is waiting for his opportunity to share in the looting?

Surprised by ratings agencies patience with SA. SA has become a very strange animal – an ex growth emerging market. Suffers from many of the typical developing world ailments namely high current account deficit, structurualy high inflation due to supply side issues, corruption that has become systemic and bloated disfunctional public service. Yet for most developing markets these issues are offset by high growth prospects – even if growth is largely based on population growth – contrary to popular/populist belief less attractive demographics than most other EM’s

End of comments.




Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.

Follow us: