S&P Global retains South Africa’s credit outlook at stable

S&P Global, one of the key credit rating agencies, has decided to retain South Africa's credit outlook at stable. The much-anticipated report, which was expected to be released on Friday, did not come out as scheduled. This decision indicates that S&P Global is maintaining its position on South Africa's sovereign debt at sub-investment grade. Annabel Bishop, Chief Economist at Investec, shed light on this development in an interview with CNBC Africa. According to Bishop, the delay in the report's release is not unusual as credit agencies often hold back when they have nothing new to say. She pointed out that the change in South Africa's credit outlook to stable from positive a few months ago suggests that there may not be significant updates at this time. However, Bishop emphasized that credit agencies like S&P Global consider factors such as economic growth, government revenue, and government finances to assess a country's ability to repay debt. While recent events like severe load shedding and the weakening rand have raised concerns, she believes that the outlook may improve in the near future. Bishop highlighted positive signs like an increase in electricity supply and potential interest rate cuts that could boost the economy. Despite global economic challenges and domestic issues like load shedding, Bishop suggested that rating agencies might be taking a wait-and-see approach before making any changes to South Africa's credit rating. She mentioned that the upcoming mini-budget would be crucial in providing further insights into the country's fiscal health. Looking ahead, Bishop anticipated that the rating agencies might wait until the end of the year to reassess South Africa's credit rating and outlook, considering various economic factors. On the topic of interest rates, Bishop indicated that a 50 basis point rate hike was likely at the upcoming meeting, with discussions on a possible 75 basis point increase to address currency concerns. She acknowledged the potential impact of higher interest rates on the economy and urged caution in managing monetary policy to avoid excessive strain on consumers and businesses. Overall, the decision by S&P Global to maintain South Africa's credit outlook at stable reflects a cautious optimism amid ongoing economic challenges. It underscores the importance of fiscal discipline and proactive measures to strengthen the country's financial resilience in the face of global uncertainties and domestic issues.