Interventions by the government to achieve the ambitions of its Operation Vulindlela is one of the main reasons that the international ratings agency, Fitch, has kept South Africa’s credit rating unchanged at BB-.
Fitch released its rating late on Friday and it is the fifth consecutive time that it has rated the country BB- since 2021.
Operation Vulindlela is a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery. It aims to transform key network industries, including electricity, water, transport and digital communications.
The government’s well-publicised interventions to overcome Eskom’s power problems and Transnet’s logistics shortcomings were noted and deemed by the agency to be good remedial interventions. These included plans to increase capacity to the power grid and the recent R47-billion guarantee facility to indebted Transnet to overcome some of the logistics challenges.
However, some of the structural reforms were not significant enough to get the country out of potential trouble. Fitch flagged some concerns about the country’s limping economy along with rising government debt.
Fitch is also monitoring ANC governance issues in the build-up to this year’s general elections.
