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S&P Global Ratings keeps South Africa notch above junk

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Staff writer ▼ | June 4, 2016
South Africa will decide by the end of this year which state-owned companies would be privatised or closed as the government cuts spending amid slow economic growth.
South Africa
To sell or not   South Africa to decide on state-owned firms by end this year
"I can say without fear of contradiction, before the end of this year, it will be possible to go beyond just the technical analysis and reporting and begin now to point at which entities have got to folded and which ones must be merged," Treasury Director General Lungisa Fuzile said in an interview with CNBC Africa.

His comments came after S&P Global Ratings affirmed South Africa's investment-grade credit rating, but kept its negative outlook citing low GDP growth.

S&P Global Ratings affirmed South Africa's foreign debt rating, which remains one notch above junk status.

S&P maintained South Africa's foreign debt rating at BBB- with a negative outlook, citing concerns about economic growth, reliable energy, labor reform and mining legislation, and warned that it could lower the rating by year-end or later if policy measures don't turn around the economy.

BBB- is one notch above the non-investment-grade category that deters institutional fund managers from holding the country's debt. A junk rating would also have greatly increased the interest South Africa must pay to borrow abroad.

"The benefit of this decision is that South Africa is given more time to demonstrate further concrete implementation of reforms that are under way aimed at achieving higher levels of inclusive growth and place public finances on a stable path," South Africa's National Treasury said in a statement.

"Government is aware that the next six months are critical."