Ratings Cos. Gave South Africa Benefit of the Doubt, Nene Says

JOHANNESBURG (Capital Markets in Africa) – Credit ratings companies gave South Africa the “benefit of the doubt” by keeping the nation’s credit assessments unchanged after the recent political transition, Finance Minister Nhlanhla Nene said.

With all three major credit rating companies that now have a stable outlook on their assessments they “are giving us a chance to implement our reforms,” Nene told reporters in London on Friday.

President Cyril Ramaphosa’s rise to power since December initially boosted sentiment and the rand following Jacob Zuma’s scandal-ridden tenure of almost nine years, during which South Africa lost its investment-grade status it held with S&P Global Ratings and Fitch Ratings Ltd. Still, Africa’s most-industrialized economy hasn’t grown at more than 2 percent a year since 2013 and is struggling to gain momentum despite the political changes that bolstered investor confidence.

Nene said last month the economy could expand faster than the 1.5 percent predicted in the February budget. After data showed that gross domestic product contracted the most in nine years in the first quarter, he said on Friday 1.5 percent growth for 2018 is “not impossible.”

Fitch kept South Africa’s debt score at junk last week and S&P did the same in May. Moody’s Investors Service affirmed the country’s debt scores at one level above junk in March, and changed the outlook to stable from negative.

The Treasury team is in London to meet with investors after a March roadshow. This is to allow talks about developments before the medium-term budget statement, Nene said.

Economic growth, structural reforms, land expropriation, free higher education and the proposed National Health Insurance all featured, Nene said.