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Treasury pledges reforms as S&P maintains non-investment grade rating

Nov 24 2018 11:45
Khulekani Magubane, Fin24

National Treasury noted sovereign credit ratings agency S&P’s decision to keep the country’s credit rating unchanged at non-investment grade late on Friday night, maintaining that government had all the policies it needed to turn the economy around in place.

S&P opted to affirm South Africa’s long term foreign and local currency debt ratings at BB and BB+ respectively and maintain the stable outlook late on Friday evening. The agency expected real economic growth of 0.8% in 2018, while the SA Reserve Bank expects growth of 0.6%.

In the statement National Treasury said the S&P decision gave South Africa an opportunity to "demonstrate further concrete implementation of measures that are aimed at turning around the growth trajectory".

"These measures include the re-prioritisation of public spending, the creation of the infrastructure fund as well as partnerships for growth. S&P has highlighted a couple of risks, including subdued economic growth, which could lead to the rating being lowered," said the statement.

Treasury said government remained mindful of the risk which S&P highlighted and that it was "fully aware that the next several months are critical". The statement went over the policy moves National Treasury spearheaded to boost the economy.

"Since the tabling of the 2018 Budget in Parliament, government has sought to reduce policy uncertainty and restore investor confidence by finalising the Mining Charter, ensuring Eskom concluded power-purchase agreements with independent power producers, updating the Integrated Resource Plan, revising the Public Procurement Bill and appointing a panel to advise government on equitable land reform that will increase agricultural output," the statement said.

National Treasury said government has moved to to restore good governance and financial stability at state-owned companies.

"New boards and executives have been appointed at Denel, Transnet, South African Express Airways and the Passenger Rail Agency of South Africa. The boards of state-owned companies have initiated forensic investigations into allegations of corruption and are taking action where evidence shows employee involvement in maladministration," Treasury said.

Treasury concluded, saying several entities updated their turnaround strategies and that the board of Eskom was in the process of preparing its long-term turnaround strategy. 

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