Cape Town — American credit rating agency S&P Global downgraded South Africa’s sovereign credit rating outlook from positive to stable on Wednesday evening.
According to Trading Economics, the agency also affirmed the debt grade at “BB-” which is three notches below the investment grade.
“Reforms to address infrastructure shortfalls and to improve governance and performance at state-owned enterprises (SOEs) are slow, weighing on growth, while contingent liabilities from SOEs pose continued downside risks to South Africa’s fiscal and debt position,” News24 quoted S&P Global as saying.
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However, the agency acknowledged that the fiscal position improved in fiscal year 2022, as revenue rose, thanks to the growth recovery following the 2020 recession, relatively high metals and minerals prices, and rising profitability in the finance and manufacturing sectors.
In response, the government acknowledged what would be required to recover.
“Government acknowledges that higher economic growth and a durable recovery in economic activity require a stable macroeconomic framework, complemented by rapid implementation of economic reforms and improved state capability.
“Government is taking urgent measures to reduce load-shedding in the short term and transform the sector through market reforms to achieve long-term energy security. Other reforms are under way to improve performance in the transport sector, in particular freight rail.”
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Compiled by Junaid Benjamin
