South Africa: Government Notes Fitch's SA Debt Rating

17 December 2021

Government has noted Fitch's decision to affirm South Africa's long-term foreign and local currency debt ratings at 'BB-' and revise the outlook from negative to stable.

According to Fitch, the revision of the outlook to stable reflected the "faster than expected" economic recovery, the surprisingly strong fiscal performance this year and significant improvements in key fiscal indicators following the rebasing of national accounts, said National Treasury in a statement.

Treasury said Fitch warned that the pandemic continued to weigh on economic performance and remained a source of downside risk for public finances.

"However, the likelihood of severe negative effects on creditworthiness has declined over the last year, despite the recent emergence of the Omicron variant of COVID-19 and the associated rapid surge in new cases in South Africa."

Treasury said government would continue to demonstrate its commitment to fiscal sustainability and enable long-term growth by narrowing the budget deficit and sizable debt.

"As stated in the MTBPS [Medium Term Budget Policy Statement], government will use part of the higher tax revenues associated with the recent commodity price surge to narrow the deficit, while increasing non-interest expenditure to support key spending priorities.

"Equally important is the faster implementation of structural reforms to unlock greater private sector investment, economic growth and job creation."

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