The Rating and Investment Information rating agency from Japan has upgraded the Republic of South Africa’s foreign currency long-term rating to A- (A minus) with a stable outlook (upgraded from stable BBB+), South Africa’s National Treasury announced on Friday.
The foreign currency short-term rating has also been upgraded from a-2 to a-1.
The upgrade is supported by the following factors: Economic growth of about 4% to 5% is expected to continue over the medium-term expenditure framework. Tax revenue is increasing given a well-established tax-collection system and the fiscal deficit as a percentage of gross domestic product (GDP) has declined to less than 1%.
Public debt is on a declining trend and is expected to fall to 34% of GDP in 2007.
The import of capital goods accompanying domestic investment in infrastructure development is increasing and capital inflow is sound and no immediate concerns exist regarding foreign currency financing. — Sapa