The National Treasury was responding to ratings agency S&P Global’s revising its outlook for South Africa’s economy from stable to negative.
The Treasury said in a statement it ‘fully recognises S&P’s assessment of the challenges and opportunities which the country faces in the immediate to long-term and remains committed to placing public finances on a sustainable path while aiming for inclusive economic growth’.
S&P Global on Friday affirmed South Africa’s long-term foreign currency debt rating at “BB” and local currency debt rating at “BB+”, and revised the outlook to negative from stable.
‘Low GDP growth, upwardly revised fiscal deficits, and a growing debt burden are damaging SA’s fiscal metrics,’ it said in a statement
The agency warned that it could lower its rating if there was “continued fiscal deterioration”. It would also consider lowering its rating if ‘the rule of law, property rights, or enforcement of contracts were to weaken significantly’.
The Treasury said: ‘According to S&P, the outlook revision indicates that South Africa’s debt metrics are rapidly worsening as a result of the country’s very low GDP growth and high fiscal deficits.’
It said the government remained committed to economic reforms aimed at reviving economic growth.
‘Furthermore, government reiterates that the growth in the public sector wage bill needs to be addressed in order to reduce the debt burden. Government, labour, business, and civil society need to work hand-in-hand, as difficult decisions that imply short-term costs for the economy and fiscus need to be made in order to turn the tide around.’
[Picture: By Shashank457 https://commons.wikimedia.org/w/index.php?curid=76260653]