We are unsure on which level corruption has influenced the decision of the ratings agency Standard & Poor’s on Friday. S&P affirmed South Africa’s credit rating, saying tax increases should help limit fiscal risks. “We expect real GDP growth in South Africa to be limited to 2.1% in 2015, owing to electricity supply shortages among other factors, but we think there will be a slight acceleration to an average of 2.7% per year over 2016-2018 thanks to an increase in electricity generating capacity, domestic consumption, and rising net exports.
“Tax increases, alongside the recent wage settlement for public sector workers, should help limit fiscal risks in 2015-2018, and we expect the treasury to stick to its pledged hard expenditure ceiling,” S&P’s said in a media statement. “Nevertheless, GDP growth remains low, current account deficits still remain relatively high, general government debt sizeable, and portfolio flows potentially volatile. “We are affirming our long- and short-term foreign currency sovereign credit ratings on South Africa at ‘BBB-/A-3’.
“The stable outlook reflects our view that a slight improvement in GDP growth in 2015-2018 and ongoing fiscal prudence will help contain South Africa’s fiscal and external balances within our expectations,” the ratings agency said.
Are they joking? They are no fundamental data whatsoever, which could support their assessment. South Africa will be lucky to reach 0.6% GDP growth in 2015, if the last negotiations in various wage sectors do not fail and further strikes can be avoided. Has Sepp Blatter moved to S&P?