The pace of economic growth remains weak, posing risks to the pace of fiscal consolidation, with rising contingent liabilities, and South Africa's ability to reduce economic inequalities in the medium term. South Africa's exchange rate appreciation in the last year, improving agricultural output, and inflation-targeting regime have helped ease inflation back into the central bank's target range, and we view South Africa's monetary flexibility as a strength for the ratings. We are affirming our 'BB+/B' foreign currency, 'BBB-/A-3' local currency, and zaAA-/zaA-1 national scale ratings on South Africa. The negative outlook on the foreign and local currency ratings reflects our view that political risks will remain elevated this year, which could undermine economic growth and fiscal outcomes more than we
