South Africa's credit rating on the mend

SOUTH AFRICA - In Brief 14 Mar 2018 by Iraj Abedian

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Quarter One of 2018 has been a turning point for South Africa's political economy outlook. Despite all predictions to the contrary, Jacob Zuma is no longer the president, and the shift to President Ramaphosa has been relatively smooth. The cloud of desperation has been replaced by newly found optimism in the business sector, the unexpected controversy around the land expropriation without compensation notwithstanding. The new Minister of Finance, Nhlahla Nene, is back in his old office (he was unceremoniously sacked by then-President Zuma in Dec 2015) and he has hit the ground running in an attempt to woo the rating agencies and assure them that the good old days of fiscal prudence and policy certainty are back. President Ramaphosa, meanwhile, is on a campaign to revive the country's national mood, promoting the notion of a new dawn of "revival and growth". Institutions of governance and law-enforcement have found a new lease on life, pursuing corrupt politicians and high level state executives in a highly visible manner. And, last but not the least, the Parliament's operations, too, have become totally different - no one seems to be untouchable any longer. Political parties are positioning themselves for the 2019 national elections, so there is a growing volume of noise around. This is likely to get louder over the next 12 months. Meanwhile, economic and business indicators are moving in a positive direction. Growth expectations are upbeat - of course, from a very low base. The foreign exchange markets are favoring the Rand, and expectations are that the Reserve Bank will relax the monetary policy stance with one or possibly two interest rate cuts. Of course, the VAT ...