The Treasury accepted the negative outlook of its credit rating and said more work was needed.
Standard & Poor’s Global Ratings (S&P) kept South Africa’s credit rating unchanged on Friday night, but the outlook for it changed from stable to negative.
That means the next step is likely to be a further downgrade within the next year or so – unless
the government can improve its fiscal position.
The Treasury said in a statement on Saturday that although S&P concedes the government has done a lot of work to reverse the picture, there is still much to be done.
“Unless the government takes steps to control the fiscal deficit and observes our sustained reform momentum, we consider it unlikely that government debt will stabilize within our three-year forecast period, ”said S&P.
The Treasury says it recognizes S&P’s assessment of the challenges facing the country in the short and long term, and the government remains committed to restoring state finances to a path of inclusive economic growth.
“The agency recognizes the work we have done to restore the credibility of the country’s weakened institutions (strengthening the National Prosecuting Authority and the South African Revenue Service), as well as those of the Reserve Bank and the flexible exchange rate that are strengths to keep the country’s rating stable, ”the statement reads.
“The government remains committed to implementing economic reform to bring about economic growth. In addition, the government emphasizes that the increase in the salary costs of the state sector must be tackled to reduce the state’s debt burden.
“Government, labor, business and civil society must work hand in hand as difficult decisions involving short-term costs for the economy and the treasury must be made to turn the tide.”