South Africa continues to depend on resident and nonresident purchases of rand-denominated local currency debt to finance its fiscal and external deficits. Its financing needs have risen beyond our previous expectations, with general government debt set to increase by an average of 4.9% of GDP over 2016-2018, to reach gross debt of 54% of GDP in 2019. The proportion of rand in global foreign exchange turnover has also declined to just below 1% on average over the past three years. We also believe political events have distracted from growth-enhancing reforms, while low GDP growth continues to affect South Africa?s economic and fiscal performance and overall debt stock. We are therefore lowering our long-term local currency rating on South Africa to
