Gordhan: SA economy needs to grow to avoid December downgrade

Johannesburg - Finance Minister Pravin Gordhan said on Friday the decision by S&P Global Ratings to keep its investment-grade credit rating was positive and showed that the country was resilient.

Speaking on Talk Radio 702, Gordhan said that growth needed to be expanded to avoid a downgrade by S&P in December.

S&P affirmed the rating on the sovereign debt at BBB-, but warned that the outlook remained negative, reflecting the potential adverse consequences of low GDP growth.

"The outlook remains negative, reflecting the potential adverse consequences of low GDP growth and signalling that we could lower our ratings on South Africa this year or next if policy measures do not turn the economy around," S&P said in a statement.

The Treasury welcomed the decision by S&P, saying it would give government more time to demonstrate the concrete implementation of economic reforms.

"The benefit of this decision is that South Africa is given more time to demonstrate concrete implementation of reforms aimed at achieving higher levels of growth and place public finances on a sustainable path," Treasury said in a statement.

A cut to below investment grade would have pushed up borrowing costs, making it harder to plug a budget deficit estimated at 3.2% of GDP in the 2016/17 financial year.