Standard & Poor's Ratings Services affirmed its long- and short-term foreign currency sovereign credit ratings on the Republic of South Africa at 'BBB-/A-3'. We also affirmed the 'BBB+/A-2' long- and short-term local currency ratings. The outlooks remain stable.

At the same time, affirmed the 'zaAAA/zaA-1' South Africa national scale ratings.

OVERVIEW

• We expect real GDP growth in South Africa to be limited to 2.1% in 2015, owing to electricity supply shortages among other factors, but we think there will be a slight acceleration to an average of 2.7% per year over 2016-2018 thanks to an increase in electricity generating capacity, domestic consumption, and rising net exports.
• Tax increases, alongside the recent wage settlement for public sector workers, should help limit fiscal risks in 2015-2018, and we expect the treasury to stick to its pledged hard expenditure ceiling.
• Nevertheless, GDP growth remains low, current account deficits still remain relatively high, general government debt sizable, and portfolio flows potentially volatile.
• We are affirming our long- and short-term foreign currency sovereign credit ratings on South Africa at 'BBB-/A-3'.
• The stable outlook reflects our view that a slight improvement in GDP growth in 2015-2018 and ongoing fiscal prudence will help contain South Africa's fiscal and external balances within our expectations.