Moody's Investors Service has affirmed South Africa’s Baa1 sovereign rating, citing stricter public spending discipline and the government’s initiatives aimed to achieve financial and labour market stability.

The global ratings agency, which lowered in September 2012 South Africa's rating to Baa1 from A3 due to concerns about the government's institutional strength and the country’s investment climate and political stability, maintained its negative outlook on the rating, citing continued social and political pressures on the macroeconomic policy framework ahead of next year's general election, sluggish economic growth, and the weakened outlook for the mining sector, which is the country's largest employer and main source of foreign-exchange earnings.

South Africa’s mining sector has been negatively affected by the recent collapse of both gold and platinum prices and also by the dwindling feasibility of many of the country's gold mines given the cost of production in ever-deeper mine shafts, coupled with high wage demands and frequent strikes.

Moody’s noted as positive the government's adoption and initial implementation of the National Development Plan (NDP), which aims to reduce poverty and inequality over the coming decades, after the governing ANC party rejected the idea of nationalizing the mining and other sectors in December 2012.

Moody's said that it could upgrade South Africa's rating outlook to stable if the government maintains its commitment to its spending ceilings, reducing its debt ratios over the medium term, and if a new labour-relations framework in the mining industry is successfully implemented and leads to stronger growth.

On the other hand, South Africa’s ratings may be lowered in the event of a negative trend in the government's fiscal and debt trajectory, and/or heightened socio-political unrest that could slow further economic growth and deteriorate financial stability.