South Africa's ratings reprieve masks more fiscal woe

Significance

The decision of the three rating agencies not to downgrade is a welcome reprieve for Pretoria after months of uncertainty and severe fluctuations in the value of the rand. South Africa will struggle to avoid downgrade in 2017, however, as President Jacob Zuma’s embattled administration will need to project political stability and follow through on its proposed fiscal strategy to maintain investor confidence -- difficult in the current climate.

Impacts

• Opposition parties and civil society groups will call for increased transparency measures, such as the proposed Public Procurement Bill.
• Business groups may push for Deputy President Cyril Ramaphosa -- one of the country's richest individuals -- to succeed Zuma.
• Issuance of permits for new power plants could slow until the new nuclear deal is either confirmed or cancelled.