Prudent macroeconomic policies and a moderate debt burden. An independent central bank committed to low inflation and well-developed domestic capital markets. Political stability and transparent institutions. Structural economic weaknesses and deep social inequalities. Modest, albeit improving, external liquidity. The ratings on South Africa reflect the sovereign's prudent macroeconomic policies, a moderate debt burden, and political stability, balanced by severe structural economic weaknesses and still modest (albeit improving) external indicators. South Africa's fiscal policies are underpinned by budgetary and administrative reforms that have improved fiscal flexibility. This has enabled the government to conduct more expansionary policies and allocate increased resources to social expenditure, without reversing the downward trend in the public debt burden. The external debt burden is manageable and decreasing,
