PRETORIA, International rating agency Fitch has affirmed South Africa’s long-term foreign and local currency debt ratings at ‘BB ‘ with a stable outlook, an outcome which the National Treasury shows that South Africans must continue to act in unison in order to return the country’s rating to investment grade status.

The Government notes the decision of Fitch and expresses gratitude to all the stakeholders who participated in the meetings with the rating agency and ensured that the country is not downgraded further, the Treasury said in a statement here Thursday.

The rating agency said despite the country’s credit strengths of deep local capital markets, favourable government debt structure and a track record of fairly prudent fiscal and monetary policy, South Africa’s ratings continued to be weighed down by low potential economic growth. Fitch also cited sizable contingent liabilities and deteriorating governance of State-owned companies as issues which weighed down ratings.

The March 2017 Cabinet reshuffle which triggered the downgrade of South Africa’s ratings is likely to undermine governance of State-owned companies (SOCs), weaken fiscal consolidation and reduce private sector investment as a result of weaker business confidence, it added in reference to the dismissal of former finance minister Pravin Gordhan.

The rating agency is also of the view that while efforts to improve the SOC governance framework will continue, implementation decisions, for example, on appointments of senior SOC management will hamper these efforts and could lead to weaker financial positions of SOCs and higher contingent liabilities for the government.

On Thursday, the government emphasised that fiscal consolidation remained firmly on track and that its efforts remained focused on improving the growth trajectory and policy perceptions as Finance Minister Malusi Gigaba re-engaged the private sector to make sure that the joint work of government, business, labour and civil society continued and that the pledges made thus far were fulfilled.

The leadership in government and the ruling party are firmly committed in improving business and investor confidence in South Africa. As Fitch has rightly mentioned, rhetoric of ‘radical socioeconomic transformation’ does not imply a fundamental policy shift, the Treasury statement said.

The statement added that the government’s main focus was to address the long-standing goal of inclusive growth. Fast-tracking the implementation of the structural reforms on growth and addressing the financial and governance issues of some of the SOCs are priorities in the short term, it said.

This outcome demonstrates that South Africans must continue to act in unison especially during difficult times and work even harder to make sure that the country reclaims its investment grade status.

The Treasury said more work lies ahead and as such, the National Development Plan (NDP), as the overarching policy of government, will continue to drive the decisions aimed at achieving inclusive growth and eradicating socio-economic challenges of unemployment, poverty and inequality.