South Africa’s Treasury released a statement on June 13 commenting Fitch’s decision to revise the sovereign’s outlook to negative from stable, pledging to maintain fiscal sustainability.
The government, which is aware of the growth challenges facing South Africa, has prioritised the rapid implementation of the National Development Plan, with reforms aimed at unlocking South Africa’s growth potential, the Treasury said. The government “will redouble its efforts to improve the regulatory environment, reduce the skills shortage and accelerate its infrastructure investment programme so as to reduce the bottlenecks constraining growth,” the Treasury added.
As to fiscal consolidation, the government is committed to “maintain fiscal sustainability and keep its debt within manageable levels,” the Treasury underscored, adding that fiscal stability “has been the hallmark of South Africa and will remain so.” The Treasury also said it is committed to the fiscal path and expenditure ceiling.
“While short term cyclical factors might cause marginal deviations from targets, we will not deviate from the long term trajectory. All necessary adjustments will be made to achieve the fiscal path,” the Treasury concluded.
Fitch said on June 13 it has revised the outlook on South Africa to negative from stable on deteriorating GDP growth outlook given the strike in the platinum sector and falling manufacturing output. Fitch warned that South Africa's persistent budget deficit is boosting public indebtedness.
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