Credit rating agency S&P Global has raised its outlook on South Africa from “stable” to “positive”.

“South Africa’s recent favorable trade conditions have improved its external and fiscal trajectory, while its relatively large net foreign assets, flexible currency and deep domestic capital markets provide strong buffers against shifts in external financing,” the S&P report said.

“We expect South Africa to remain a current account surplus in 2022 in 2022, albeit less than in 2021, for the third year in a row, as base metal prices and mining exports have risen significantly since the Russia-Ukraine conflict “, – said S&P. .

He said he expects tax revenues that came in higher than expected, especially from mining companies, to help reduce the fiscal deficit and debt as a share of GDP compared to his expectations six months ago.

“Structural barriers are likely to continue to put pressure on medium-term growth, in particular unreliable electricity supply, weak investment costs and a rigid labor market with a strong trade union in the public and private sectors.

“Continuation of economic reforms, for example, related to diversification of electricity production, access of third parties to the freight network, privatization [state-owned enterprises]as well as changes in the regulation of the mining industry, can promote growth, ”said S&P.

The government said it welcomed the decision to revise the country’s credit rating outlook from stable to positive, reaffirming the long-term foreign and local currency debt ratings at “BB-” and “BB”, respectively.

According to S&P, recent favorable trade conditions in South Africa have improved the external and fiscal trajectory, while a fairly large position on the country’s net foreign assets, flexible currency and deep domestic capital markets provide strong buffers against shifts in external financing, the report said.

S&P also noted some improvements in the implementation of key reform objectives under Operation Vulindlela.

“According to the Statement on Medium-Term Fiscal Policy for 2021 and the Budget for 2022, the government uses part of the additional revenues to accelerate debt stabilization, most of which are aimed at meeting immediate social needs, promoting job creation through the Presidential Employment Initiative and the Presidential Employment Initiative. public health.

“Accelerated economic reforms, accompanied by fiscal consolidation to provide a stable basis for growth, will contribute to faster recovery and higher levels of economic growth in the long run.”

Read: South Africa’s middle class is in serious financial trouble – that’s who is fighting the hardest

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