PRETORIA, The South African government says it has taken note of the decision of international rating agency Fitch to affirm the country’s long term foreign and local currency credit ratings at ‘BB ‘, with stable outlook.

A statement released by National Treasury following the release of the Fitch report earlier Friday said the proactive steps the government was taking towards economic growth were starting to bear fruit.

Collaboration with government, business, labour and civil society continues to yield the necessary interventions to positioning South Africa as an attractive investment destination, while also creating an enabling policy environment for inclusive economic growth, the Treasury said.

According to Fitch, the affirmation and stable outlook takes into consideration signs of recovering governance standards and the prospect of a mild cyclical recovery but also indications that financial challenges at key state-owned enterprises (SOEs) remain substantial and the fact that government debt has yet to stabilise.

The rating agency believes that changes in the political leadership following the African National Congress electoral conference in December 2017 have led to a significant improvement in economic confidence. Despite a sharp contraction in economic growth the first quarter, Fitch expects Gross Domestic Product (GDP) growth to recover to 1.7 per cent in 2018 and 2.4 per cent in 2019. These forecasts are higher than the 2018 Budget assumptions.

Fitch said the ratings are supported by a favourable government debt structure, deep local capital markets, a healthy banking sector and strong institutions. Furthermore, South Africa’s institutions, including the judiciary, South African Reserve Bank and National Treasury, have shown significant resilience over the last years, despite the serious challenges they encountered.

The Treasury said the government fully recognized Fitch’s assessment of challenges and opportunities the country faced in the immediate to long term.

Concluding critical policies, such as the Mining Charter, remains important for providing policy certainty in the country. Tangible progress has been achieved on most of the 14 Confidence Boosting Measures and this is expected to translate into improved investor confidence,”it added.

Furthermore, the recent changes in governance in critical SOEs and the 2018 Budget, which outlined decisive and specific policy measures to strengthen the fiscal framework, are expected to improve the investment climate of South Africa.”

Government is also prioritising its plans for inclusive growth. The agenda for structural reforms that are much needed to raise South Africa’s long-term economic growth is underpinned by the National Development Plan priorities of Raising employment through faster economic growth; Improving the quality of education, skills development and innovation; and Building the capacity of the State