South Africa

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile Electricity and infrastructure shortfalls continue to hinder economic growth. High financing needs will largely be met through deep domestic capital markets, despite the multiple risks to public finances. --Severe electricity shortages, alongside bottlenecks across the rail network and at ports, will continue to weigh on real GDP per capita growth. --Fiscal transfers to weak state-owned entities, large public wage increases, and moderating commodity revenue will drive continued accumulation of public debt throughout our forecast horizon. --Private-sector investment in generation and renewables should pick up, but the implementation of broader reforms to address constraints remains slow. --Import requirements for private sector electricity generation and

...A severe electricity problem and other infrastructure shortfalls will continue to constrain South Africa's economy and prevent structural improvements in social and economic conditions. Consequently, the country's real GDP per capita growth is likely to remain below that of peers and unlikely to materially alleviate unemployment and inequality (see chart 1). The government has reiterated its commitment to addressing these problems through policies and reforms aimed at promoting private sector investment in renewable energy, but implementation is slow and fails to offset ageing infrastructure. As announced in February 2023, the Ministry of Finance designed a debt relief package for state electricity provider Eskom to create more headroom for the utility to improve its operations. Still, Eskom will likely improve baseload...

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