SA must heed Fitch's reform opportunity - Treasury | Fin24
 
  • Going down

    ‘Massive’ fuel price drop on the cards for December - AA

  • Good neighbours

    Zimbabwe must be supported, Ramaphosa has told a meeting of EU leaders

  • Postbank

    The state bank in the making has singled out customers at the bottom of the pyramid

Loading...

SA must heed Fitch's reform opportunity - Treasury

Jun 08 2016 16:48

Cape Town - Ratings agency Fitch has given South Africa a narrow window to demonstrate further concrete implementation of reforms, National Treasury said on Wednesday.

It emphasised that these reforms are already underway and aimed at "turning around the growth path and placing public finances on a more sustainable path".

Treasury welcomed Fitch's decision to affirm SA’s long-term foreign and local currency debt at "BBB-" and "BBB" respectively, following a downgrade announced in December 2015. The foreign currency bond rating, therefore, remains one notch above sub-investment grade and the domestic currency bond rating remains two notches above sub-investment grade.
   
According to Fitch, affirming the "BBB-" rating with a stable outlook reflects low gross domestic product (GDP) growth trends, significant fiscal and external deficits and debt levels balanced by strong policy institutions, deep local capital markets and a favourable Government debt structure.

READ: Junk reprieve strengthens rand after GDP news hurts currency

"Once again, this rating outcome demonstrates that during difficult times, SA – Government, labour, business and civil society – can work together to achieve a common goal," Treasury said in a statement.

"Government is grateful to all social partners for their efforts towards achieving this positive outcome and urges everyone to continue this close working relationship over the challenging period ahead."

Treasury takes note of a couple of risks highlighted by Fitch. The ratings agency is of the opinion that these risks could lead to the rating being lowered.

"Government is mindful of these and fully aware that the next several months are critical. We are stepping up the implementation of the 9-point plan and other measures to boost the economy," Treasury promised.

It said it is "redoubling" its efforts aimed at restoring confidence and boosting investment among local and international investors, unblocking obstacles to faster employment growth in key sectors and undertaking fiscal, state owned enterprise (SOE) and regulatory reforms.

READ: SA interbank transactions drop most in 8 years - index   

"President Jacob Zuma's meeting with the minister of finance and senior Government officials this week was an expression of Government’s commitment to accelerate implementation of growth-inducing measures and strengthen cohesion in government," Treasury emphasised.
 
"Fitch’s decision is testament to the fact that despite the structural constraints we face, SA remains an attractive investment destination relative to its peers."

Treasury regards SA as a country that has very liquid financial markets and a well-capitalised banking sector, complementary monetary, fiscal and exchange rate policies, massive natural resource base, as well as strong and transparent macro institutions.

"SA continues to play an important role in supporting development in the African continent. These are some of the factors that have enabled the SA economy to demonstrate much greater resilience in the face of exceptionally difficult global and domestic economic conditions," Treasury concluded.

ALSO READ: SA makes final junk hurdle, but GDP dives 1.2%


Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

fitch  |  treasury  |  ratings agencies  |  sa economy
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Would you switch to a bank that rewarded you for 'good' financial behaviour?

Previous results · Suggest a vote

Loading...