According to Fitch, South Africa’s credit rating is constrained by several factors, including low GDP growth, high poverty and inequality levels, a high and rising government debt-to-GDP ratio, and a rigid fiscal structure that hampers budget deficit reduction.
In a statement welcoming the decision, the government said the ratings are supported by a favourable government debt structure with long maturities and mostly local currency denominated, strong institutions and a credible monetary policy framework.
“Reforms focused on fixing network infrastructures (electricity, logistics, water, digitalisation) have alleviated load shedding and ended the decline in freight volume transported, contributing to Fitch’s forecast of a modest increase in real GDP growth.
“The government’s economic growth strategy will continue to focus on maintaining macroeconomic
stability to reduce living costs and grow investment, executing reforms to promote a more dynamic economy, building state capability in core functions and supporting growth-enhancing public infrastructure investment.”
The government said that over the medium term, it will invest over R1 trillion in infrastructure, and reforms will make it easier for the state and the private sector to invest in roads, rail, energy, and water.
