It did also say that “The new government is pursuing a series of economic reforms that should help boost the economy from 2019, despite structural impediments, chronic skills shortages, and high unemployment.”
Following the medium-term budget policy statement (MTBPS) in October, S&P said SA was sending out the right signals, although risks remained.
The investment and jobs summits, along with the economic stimulus plan, were moves in the right direction, but the postponement of fiscal consolidation and the lack of clarity around land expropriation were worries, sovereign ratings director Ravi Bhatia said at the time, cautioning that these could lead S&P to cut the country’s sovereign rating.
S&P was the first of the big three ratings agencies to react when former president Jacob Zuma fired respected finance minister Pravin Gordhan in a surprise cabinet reshuffle on March 31 2017. S&P cut SA’s foreign-currency bonds to junk status three days later. Fitch followed suit four days after S&P.
S&P left SA’s local currency debt — which accounts for about 90% of government bonds — at investment grade until November last year.
Both Fitch Ratings and Moody’s Investors Service are yet to make decisions.
Moody’s did not make a call as scheduled in October but released an unfavourable statement following the MTBPS, calling it a credit negative, renewing fear that the country could still be downgraded by the last of the big three rating agencies to rate it above investment grade.