GNU attracts positive reaction as S&P revises SA's outlook

CAPE TOWN - The Government of National Unity (GNU) has attracted a positive reaction out of American ratings agency, S&P Global, which has revised the country’s outlook from stable to positive.
 
It’s also affirmed the sovereign’s long-term foreign and local currency debt ratings at BB and BB, respectively. 
 
Tabling the first medium term budget policy statement of the new administration last month, Finance Minsiter Enoch Godongwana said Treasury’s position remains to keep the country’s borrowing under control in efforts to reduce its more than R5.2 trillion debt. 
 
According to S&P, the decision to revise South Africa’s outlook reflects the agency’s view of increased political stability. 
 
It says following the May elections, the impetus for reform could boost private investment and GDP growth. 
 
The agency also notes that since the formation of the GNU, debt yields and portfolio inflows have improved, leading to an easing of financing conditions and currency strengthening. 
 
Even though government is predicting lower economic growth of only 1.1% in this financial year, compared with its February forecast, S&P says it sees greater efforts towards achieving a primary surplus and fiscal consolidation. 
 
Treasury has welcomed the improved rating, saying government’s strategy is focused on achieving fiscal sustainability, supporting economic growth and critical social services.