Ratings agency changes SA’s outlook from stable to POSITIVE

We may almost spend R22 million on a giant flag. But, we may also be doing a few new things right when it comes to making business a little easier to do. Despite constant bad news with Eskom sabotage and a near-constant Stage 2 of power cuts, credit ratings agency S&P has given the country a boost.

Ratings agency S&P upgrades SA credit rating

S&P has revised South Africa’s credit rating outlook from “stable” to “positive”.

“The positive outlook reflects our expectation that favorable terms of trade, a path toward contained fiscal expenditure, and the implementation of some structural reforms could lead to a continued easing of fiscal and external pressures.

We could raise the ratings if economic growth is higher than we currently expect, and if we see continued fiscal consolidation, against a backdrop of structural and governance reforms and continued supportive external sector dynamics.”

S&P said in a statement

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S&P warns that it could still change its mind. The outlook could be moved back to stable if “external or domestic shocks” derail our economic growth. The agency says that financing risks from entities like Eskom, are exactly the kind of shocks that could destabilise things.

Government expected to ‘make progress’

While explaining its decision, the ratings agency says that it expects our government to make some progress in tackling structural issues.

S&P notes that South Africans are growing more and more frustrated too. It says that social pressure on government is set to remain high. That’s as a result of frustration over high unemployment, inequality and weak delivery of basic services.

And any word on COVID and more lockdowns? The agency believes that due to low hospitalisation numbers, it does NOT expect government to return to another state of disaster.

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