FULL STATEMENT: Treasury responds to S&P ratings

Cape Town - S&P Global  Ratings (S&P) has affirmed South Africa’s long and short term foreign and local currency bond ratings at ‘BBB-/A-3’ and ‘BBB+/A-2’ respectively.

The foreign  currency  bond  rating remains one notch  above  sub-investment  grade whereas the domestic  currency  bond  rating  remains  three  notches  above  sub-investment grade. Government notes and welcomes S&P’s decision to affirm South Africa’s credit ratings.

Read: FULL STATEMENT: Why S&P is still worried about SA

The  benefit  of  this  decision is  that South  Africa is given  more  time to demonstrate further concrete implementation of reforms that are underway aimed at achieving  higher levels of inclusive growth and place public finances on a sustainable path.

The  rating  outcome demonstrates that South  Africans can unite,  especially  during difficult times, to achieve a common mission.

In  this  regard, government  thanks  all social  partners  for  their  efforts  towards  achieving  this  positive  outcome  and  urges our  partners  to  continue  its  close  working  relationship  with  government over the period ahead.

S&P maintained the negative outlook on the rating, citing concerns about economic growth  and  warned  it  could  lower  the  rating  by  year end  or  next year  if  policy measures  do not  turn  the  economy  around.  Alternatively, S&P could  revise  the outlook to  stable if they observe policy implementation that  leads  to  an  improved business  confidence  environment  and  increased  private  sector  investment and ultimately result in high er levels of growth.

Government is aware that the next six months are critical and there is a need to step up the implementation of the 9 point plan and other measures to boost the economy.

Government, business and labour will collectively intensify efforts aimed at:

i)  Restoring confidence and boosting investment amongst local and international investors;
ii)  Unblocking obstacles to faster employment growth in key sectors; and
iii) Undertaking fiscal, State Owned Companies (SOCs) and regulatory reforms.

United  effort  towards  concrete  delivery  in  these  priorities  will  lay a  solid  foundation for all South Africans to break through, in a sustainable manner, the cycle of poverty, inequality and unemployment.