Business, economists cheer S&P upgrade as momentum builds for South Africa's recovery

SOUTH Africa’s business community and leading economists have welcomed S&P Global Ratings’ upgrade of the country’s long-term foreign and local currency credit ratings — the first upward revision in nearly 20 years.

- YOGASHEN PILLAY

THERE has been welcome reaction from the business community and economists to S&P Global Ratings upgrading South Africa's long-term foreign and local currency credit ratings for the first time in nearly 20 years.

(PXhere.com)

S&P lifted South Africa’s foreign currency rating from BBto BB, while the local currency rating improved from BB to BB+, reflecting stronger fiscal performance, a more stable economic environment, and improving investor sentiment.

North-West University Business School economist, Professor Raymond Parsons, said the upgrade, though widely anticipated, marks an important vote of confidence in the economy.

“It recognises the extent to which certain recent positive economic developments have improved SA‘; fiscal position and growth outlook, and which have strengthened investment sentiment,’ Parsons said.

“The S&P decision has now opened the way for SA to eventually extricate itself from its current junk status, but there remains a long way to go”

Parsons added that to regain full global investment status still requires that SA’s economic steersmanship stays firmly on track over the next few years.

Unisa economist Dr Eliphas Ndou said the sovereign upgrade will reduce South Africa's risk premium and, by extension, the cost of servicing government debt.