S&P’s review of South African sovereign rating and outlook

The Banking Association South Africa (BASA) welcomes the outcome of Standard and Poor’s (S&P) ratings review, announced today.

This is attributable to the credibility and strength of our institutions, amidst the challenging domestic economic and political circumstances that prevail. It is a positive affirmation of the confidence that international investors and institutions have in the leadership at the helm of our economy, in both the public and private sector.

According to Cas Coovadia – Managing Director of the Banking Association:

“We will still have a long way to go in order to prove that we are firmly on a sound financial footing and economic trajectory. However, under the leadership of Finance Minister Pravin Gordhan, there are positive signs that we are beginning to chip away at the implementation of budget consolidation and structure economic reforms to boost the economy.”

“We are cognisant that this has happened under difficult and trying personal and political circumstances for Minister Gordhan. We commend him for his single-mindedness, in placing the interests of our democracy, country and economy ahead of his own,” adds Coovadia.

The Banking Association pledges our continued to commitment to work in support of Minister Gordhan budget proposals, in tandem with business and labour.

The decision by S&P reaffirms the imperative of the collective effort by Government, business and labour to implement various concrete initiatives to avert a ratings downgrade, control and further improve public expenditure and debt level, achieve higher levels of economic growth, attract and retain investment, create jobs and reduce unemployment.

“Our collective efforts continue to pay dividends. Junk status or not, we must sustain and intensify our joint initiatives to address the binding constraints and challenges we face. With S&P placing the country on a negative outlook citing concerns about economic growth and the implications of policy implementation does not result in an economic turnaround,” says Coovadia.

Whilst we may continue to do enough to avoid ratings downgrade, ratings agencies such as S&P may choose revise their outlook in either direction. Therefore we cannot afford any further deterioration in the business confidence environment and which hamper increased private sector investment resulting in higher levels of growth.

Statement issued by Cas Coovadia, Managing Director of the Banking Association, 3 May 2016