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S&P downgrades SA outlook, warns debt rating unlikely to improve

The agency downgraded the outlook for the country overnight, placing the country's local currency rating at BB+.

The agency made special mention of Eskom in its statement, saying the power utility is likely to be an enduring drain on South Africa's fiscal resources. Picture: Supplied

JOHANNESBURG –Ratings agency Standard & Poor's (S&P) has on Saturday morning warned that unless government controls the deficit, it's sovereign debt rating is unlikely to improve.

The agency downgraded the outlook for the country overnight, placing the country's local currency rating at BB+.

S&P says low GDP growth, the ever-rising national deficit, and a growing debt burden are damaging South Africa's fiscal metrics.

The agency made special mention of Eskom in its statement, saying the power utility is likely to be an enduring drain on South Africa's fiscal resources.

It says the country's economic performance has disappointed; depressed in parts by natural forces like drought.

But also by matters within the governments control, including low investment, power shortages, and limited reform momentum.

The announcement overnight relates only to the outlook.But the agency is warning it could consider lowering South Africa's ratings if it judges the rule of law, property rights, or enforcement of contracts weaken significantly.

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