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SA gets second ratings boost

Johannesburg - International ratings agency Standard and Poor's (S&P) upgraded South Africa's outlook to stable from negative on Tuesday, and said the country's external balance sheet would remain manageable.

S&P is the second ratings agency to upgrade the country's outlook, after Fitch issued a similar assessment last week.

"The stable outlook reflects our expectation that South Africa's external balance sheet will remain manageable, despite volatile portfolio flows, and that fiscal deficits will gradually reduce over the next few years," S&P said.

The National Treasury has said it plans to trim its budget deficit to around 3.2% of gross domestic product (GDP) by 2014.

S&P said it expected government to remain committed to stabilising debt levels at slightly more than 40% of GDP.

"We consider that South Africa's moderately countercyclical macroeconomic policies continue to support stability and external financing. We expect GDP to increase by 3% to 4% over the next few years," it said.

The government expects the economy to grow by 3.5% in 2011, from an expected 3% in 2010.

S&P also affirmed South Africa's BBB+ foreign currency rating, but lowered the local currency rating to A from A+.
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