S&P's South Africa rating decision explained

S&P Global Ratings has affirmed South Africa's credit rating despite ongoing concerns about political uncertainty and economic challenges. In a recent interview with CNBC Africa, Gardner Rusike, Associate Director at S&P, explained the factors behind the decision and provided insights into the country's outlook. Following a downgrade in April, S&P's decision to maintain the rating was influenced by the government's commitment to policy continuity and fiscal consolidation. However, economic growth projections have been revised down, and political risks remain a significant concern. Rusike highlighted the impact of upcoming political events, such as the ANC elective conference in December, on South Africa's economic prospects. The country's ability to govern state-owned entities, amid issues like the Gupta leaks, also factors into S&P's assessment. Additionally, S&P aims to close the gap between foreign currency and local currency ratings, with a focus on fiscal flexibility and market credibility. Despite challenges, Rusike remains cautiously optimistic about South Africa's long-term potential, especially if key issues are addressed effectively and a stable policy environment is established.